Cattle futures advanced Friday to their highest close this month.
High wholesale beef prices–a sign of strong demand–encouraged better-than-expected cash cattle sales, which came in as high as $1.30 a pound in some states.
Despite the gains, live-cattle futures for April delivery continued considerably below cash sale values, a sign that traders expect a new wave of supply on the market to depress prices when those contracts are due in a few weeks.
April live-cattle futures rose 0.9% to $1.17600 a pound at the Chicago Mercantile Exchange.
Rising beef prices have pushed meat packers’ processing margins up $53.52 per head for the week, according to the HedgersEdge packer-margin index, encouraging them to keep buying and boosting the cattle trade for now.
But that spread of over 12 cents between cash and futures prices has some prepared for a tumble, with analysts expecting beef prices to peak and more supply in the market as cattle are ready for slaughter in the spring.
“Bigger numbers are coming ahead,” said Don Roose, president of investment firm U.S. Commodities Inc. “Going into grilling season, are you going to see demand keep up with supply?”
Hog prices, however, drifted downward most of the day before shooting into the black in a late rally. CME April lean-hog contracts finished the session up 0.2% at 68.175 cents a pound.
Supply concerns have also hit hog prices, with analysts expecting large quantities of meat to push hog prices downward as demand drops off after Easter gives it a seasonal boost.
Grain and soybean futures extended their losses Friday in a down week for many commodities.
Soybeans and corn had the steepest slump, with prices falling every day this week on growing concerns that U.S. producers could be losing their edge to upstart South American rivals.
Most-actively traded May soybean futures fell 4 1/2 cents to $10.06 1/2 a bushel on the Chicago Board of Trade, rounding off losses of 3% for the week. Contracts are trading at two-month lows.
A U.S. Department of Agriculture report Thursday caught many by surprise with a series of forecasts for big corn and soybean harvest-bounties that could push down prices. The USDA raised its production numbers for Brazil’s corn and soybean harvests this year above analyst estimates, while stoking concerns by upping its estimate for domestic soybean stockpiles, partly a consequence of reduced exports.
The report raised “legitimate longer-term concerns about the U.S. export program” by showing South American production taking off as American exports shrunk, said Arlan Suderman, chief commodities economist at brokerage INTL FCStone Inc.
Corn prices also dropped on the prospect that the South American harvest of that grain could be strong as well. May corn futures dropped to the lowest point since Jan. 11, falling 2 3/4 cents to $3.64 1/4 a bushel. It lost 4.3% over the course of the week.
Wheat found some strength earlier in the week on the back of concerns about drought in parts of the U.S. plains, where the winter wheat crop has begun to come out of dormancy early. But improving weather forecasts encouraged a reversal of those bets.
Wheat dropped 3 1/2 cents on Friday to $4.40 1/2 a bushel, down 2.9% for the week.
Other commodities weren’t helping. A rout in crude oil prices over the course of the week put pressure on ethanol producers, whose product became less competitive as a fuel source.
Oil prices continued to slide Friday on fears that coordinated production cuts won’t be enough to eliminate a glut of oil that has weighed on the market.
U.S. crude futures fell 79 cents, or 1.6%, to $48.49 a barrel on the New York Mercantile Exchange, their lowest level since before the Organization of the Petroleum Exporting Countries struck a deal to cut production. Brent, the global benchmark, fell 82 cents, or 1.6%, to $51.37 a barrel on ICE Futures Europe.
Gasoline futures fell 2.42 cents, or 1.5%, to $1.6001 a gallon. Diesel futures fell 2.59 cents, or 1.7%, to $1.5036 a gallon.
Natural gas prices edged higher Friday as expectations of colder weather continued to lift prices.
Natural gas for April delivery settled up 3.4 cents, or 1.14%, at $3.008 a million British thermal units on the New York Mercantile Exchange.
Prices are still down close to 20% year to date because of a historically warm winter that sapped heating demand. But they have gotten a short-term boost from colder weather and gained 6.4% this week. About half of U.S. homes burn natural-gas for heat, making winter’s cold still the biggest driver in the market.
Gold prices edged lower Friday, as a robust U.S. jobs report bolstered the case for more interest-rate increases this year.
Gold for April delivery closed down 0.2% at $1,201.40 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices swung between gains and losses several times after the data was released at 8:30 a.m. ET.
The S&P 500 rose Friday after the February jobs report showed robust hiring, but the index notched its first weekly decline since January.
Losses in the energy sector have been pressuring major indexes as the price of U.S. crude oil tumbled back below $50 a barrel.
The Dow Jones Industrial Average rose 45 points Friday, or 0.2%, to 20903. The S&P 500 added 0.3% to 2372, and the Nasdaq Composite gained 0.4% to 5861. All three posted weekly declines.