Futures File: Pork market sizzles into grilling season

Hog futures are nearing a one-year high, trading Friday for more than 80 cents per pound. Prices are exploding as short-term supplies run low with meatpackers buying hogs ahead of the grilling season and Father’s Day. Upcoming hot weather will also put stress on hogs, which will cause the animals to have trouble gaining weight, further limiting supplies of meat. As a result, hog prices have risen by more than 10 percent over the past two weeks.

Despite the recent rally, many hog producers are worried that prices could stumble again if trade disputes continue with Mexico, China and Canada, three major importers of U.S. pork. On Thursday, Mexico, the largest buyer of U.S. pork, announced it would impose a 20 percent tariff on U.S. pork if President Trump follows through on the threatened tariffs against Mexican steel and aluminum.

While a retaliatory tariff would be devastating for farmers, consumers would likely benefit from this move as it could lead to a glut of pork in the United States and lower prices at the grocery store for pork chops, hot dogs and bacon.

Grains grind lower

Corn and soybean prices tumbled to a four-month low this week as farmers watched good weather send prices into the dust. The corn crop is almost entirely in the ground and soybeans are nearing 75 percent planted. Early reports estimate these are the healthiest crops in 20 years, raising expectations for bumper crops.

Farmers are largely happy about good weather, but fears of a large crop and looming trade issues are scaring investors away from corn and soybeans. As they dumped their investments in the markets Friday, July corn and soybean futures fell to $3.73 and $9.62 per bushel, respectively.

Peso heads south

The Mexican peso is nearing a record low value, falling well below 5 cents in value this week for the first time since early 2017.

The peso was hard-hit by Trump’s election and expectations that renegotiated trade deals would hurt the Mexican economy. Ongoing disputes over NAFTA and other trade policies continue to weigh on our southern neighbor, pulling the currency to 4.9 cents Friday.

A weak currency hurts Mexicans’ ability to buy U.S. goods like machinery, vehicles, and medical instruments, but also makes Mexican goods and labor less expensive to American consumers and companies.

Additionally, a weak peso makes a Mexican vacation less expensive as the U.S. dollar carries even more value south of the border.

– Walt and Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, Kansas. This is not a solicitation of any order to buy or sell any market.

This article provided by NewsEdge.