Oil Hits Three-Week High

Cattle futures closed lower in a volatile Monday session, as traders bet high beef prices would scare consumers away.

Live cattle futures for June delivery opened slightly higher before falling toward the lower limit of the daily trading band. June live cattle contracts closed 2.2% lower at $1.2245 a pound at the Chicago Mercantile Exchange. August feeder cattle futures closed down 1.4% at $1.42525 a pound.

Cattle futures have fallen despite a continued rally in wholesale beef prices, which rose 1.7 cents to $2.49 a pound as of Monday morning. Analysts said beef has risen so much it would make pork and poultry look like bargains in comparison.

“You’ve taken beef to a level where the retailer is not comfortable buying it,” said Coby Tresner, an independent trader in Scottsdale, Ariz. “The cattle market is setting up for a one-way trip down.”

Falling weekly cattle slaughter coupled with higher placements in commercial feedlots, Mr. Tresner said, suggested supply could increase just as demand tails off. Packers killed 609,000 cattle last week, down from 612,000 the week before.

Momentum Friday over the Trump administration’s agreement with Beijing to reopen Chinese markets to U.S. beef exports didn’t carry through the weekend. Analysts voiced skepticism that such a deal would result in concrete changes to the U.S. supply-demand balance in the near future.

Hog futures were mixed Monday. CME June lean hog contracts traded higher for much of the session before closing 0.9% lower at 77.25 cents a pound.

Analysts said lower pork prices, which fell to 82.2 cents a pound Monday morning, should help give that meat an edge over beef at the retail counter this summer.

But money flow out of cattle futures, as record-high open interest eases, also limits the upside potential for hogs futures.

Soybean futures rose on Monday as traders bet good corn-planting weather would discourage farmers from switching acreage to the oilseed.

Clear skies over much of the Midwest this weekend allowed farmers to work overtime to catch up on corn seeding, which has recently been delayed by rain. That weighed on corn prices, but analysts said it would likely limit the amount of soybeans farmers that choose to plant instead.

With projected U.S. soybean acreage this year already a record, however, the boon to prices was limited.

“Without a major weather premium here being built in,” said Sean Lusk, director of commercial hedging at Walsh Trading, “rallies look to be continually sold.”

Data from trade group the National Oilseed Processors Association also showed weaker demand for the American soybeans. NOPA said the U.S. soybean crush in April fell to 139.1 million bushels, down from 153.1 million in March. That was below the lower range of analyst forecasts and last year’s April rate of 147.6 million bushels. Soybean oil stocks fell to 1.725 billion pounds from 1.815 billion in March.

Soybean futures for July delivery closed 0.2% higher at $9.65 1/4 a bushel on the Chicago Board of Trade, easing off highs earlier in the session.

Improved weather weighed on corn futures. Friday’s CFTC report showed managed funds increasing bets that corn prices would fall by 13% last week to a net short position of 208,642 contracts.

CBOT July corn futures fell 0.9% to $3.67 3/4 a bushel. CBOT July wheat futures dropped 2.2% to $4.23 1/4 a bushel, the lowest close since April 24.

Cotton futures soared at the open Monday, with the July contract surging to its trading limit by 9:30 a.m. ET, squeezing short players in the market before pulling back.

Cotton for July delivery was up 2.5% at 84.26 cents a pound on the ICE Futures U.S. exchange, on track for its highest close since May 9, 2012.

Oil prices jumped to a three-week high after Russian and Saudi Arabian energy ministers said they would back a nine-month extension to an agreement aimed at bringing down global inventories and lifting prices.

U.S. crude futures rose $1.01, or 2.11%, to $48.85 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 98 cents, or 1.93%, to $51.82 a barrel on ICE Futures Europe.

Monday’s move capped a four-day streak of gains for oil prices, lifting both benchmarks to their highest levels since late April.

Gasoline futures rose 1.93 cents, or 1.22%, to $1.5954 a gallon. Diesel futures rose 1.63 cents, or 1.09%, to $1.5096 a gallon.

Natural gas prices pulled back from highs hit late last week, amid growing concerns that mild temperatures will limit demand in the coming weeks. Futures for June delivery fell 7.5 cents, or 2.19% to $3.3490 a million British thermal units on the New York Mercantile Exchange, snapping a four session winning streak that pushed prices to their highest level since Dec. 30.

The S&P 500 and the Nasdaq notched record closing highs on Monday, powered by demand for technology stocks after a global cyber attack and by rising oil prices. The Dow Jones Industrial Average was up 85.33 points, or 0.41 percent, to 20,981.94, the S&P 500 gained 11.42 points, or 0.48 percent, to 2,402.32 and the Nasdaq Composite added 28.44 points, or 0.46 percent, to 6,149.67.


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