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Paragon Investments' Futures File: Copper, Soybeans & Hogs


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Copper Red Hot on China Talk

Copper prices are heating up, hitting a six-week high on Friday at $2.68 per pound.

The rally was sparked by news that China and the United States have agreed to hold off on proposed tariff increases, a measure of goodwill ahead of trade talks next month.

China is the worlds biggest consumer of copper, but the ongoing trade war has sapped its economic growth. Friendlier trade with the United States could help boost both nations demand for the red metal, which is used extensively in construction, automobiles, and electric appliances.

Additionally, the European Central Bank lowered interest rates again, giving Europes economy a shot in the arm. Lower rates from the ECB and our own Federal Reserve help make mortgages, auto loans, and credit card debt cheaper, which encourages spending and thereby copper consumption.

Soybeans Shoot Higher

Soybean prices got a lift this week on renewed hopes for a trade deal with China and tighter supply outlooks from the U.S. Department of Agriculture.

The monthly USDA report released Thursday morning projected that this years soybean crop will be slightly smaller, and demand will be higher, creating a much tighter supply situation, both domestically and globally.

Meanwhile, China has begun showing interest buying U.S. soybeans ahead of the trade talks, giving hope that the worlds largest soybean buyer could return to buying one third of U.S. soybeans, which would give prices a significant boost after the last years malaise.

By midday Friday, November soybeans were trading for $9.00 per bushel, up 42 cents during the week.

Hog Wild Rally

Hog prices exploded this week, moving the exchange-maximum limit up on Thursday and Friday. Prices leapt after news broke of a large Chinese purchase of U.S. pork.

Chinas ongoing battle with the African Swine Fever outbreak continues to wipe out its domestic hog herds, which should be boosting demand further for U.S. meat. However, retaliatory tariffs on U.S. pork exports have stifled Chinese demand for U.S. hogs, keeping our prices low.

Prior to the explosive rally, December hog prices touched contract lows under 58 cents per pound, reflecting the general bearishness of the market.

However, the extreme negative sentiment turned around by Friday, with the market locked limit up at 68.7 cents per pound, a sign that buyers will likely pay even more on Monday.



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About the author


Alex Breitinger is Paragon's Director of Business Analytics. He has more than 10 years of experience serving agricultural producers and end users.

Alex’s data-forward approach delivers meaningful analysis to clients looking to more deeply understand their complex operations. His expertise is helping agribusinesses manage agricultural commodity price risk, but he also has specialized knowledge of hedging other financial risks like metals, energy products, stock portfolios, and foreign currencies.

Before venturing into the world of commodities, Alex carried out analytical research for the National Oceanic and Atmospheric Administration (NOAA), the governmental organization that oversees the National Weather Service.

In addition to his work with clients, Alex authors the weekly syndicated column ‘Futures File’ about commodities markets. It appears in newspapers across the country and reaches more than a million readers weekly.

He can be reached by phone at 785-338-9611

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