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Futures File: Silver sizzles, then fizzles

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Silver has been the hottest game in town, recently blasting more than $6.00 per ounce in less than five weeks. Gold, platinum, and copper raced higher as investors sought protection from inflation.

Investors also guessed that our Federal Reserve Bank would stop raising interest rates in the coming months.

The Producer Price Index, released on Thursday, rose 2.7% in March from a year ago, indicating more inflation but at a drastically reduced rate.

Gold bugs and silver bulls also fear uncertainties in our banking system and geo-political issues could shift interest in metal investments.

Demand for metals from solar and electric car manufacturing provided additional buying.

Despite all these factors driving metals up, they made a reversal on Friday, especially silver, and closed sharply lower.

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Cattle cracks uptrend

Like the reversal seen in metals, cattle prices spiked by 11 cents per pound in one week, then on Friday, slid downward as some speculators thought the price bubble was bursting.

Even though beef is just beginning to enter its highest demand period and the shortage of cattle should dominate markets for many months to come, the sharp rise in prices may have been enough to reduce demand or cause a shift to other sources of protein in coming weeks.

Corn and cotton loving manure

The high cost of manufactured fertilizers for U.S. row crops is motivating more farmers to switch to other forms of fertilizer.

Soybeans produce their own nitrogen so are less needy of fertilizers, but shortages and high costs of chemical fertilizers, some of which are imported, have plagued corn and cotton farmers.

So some growers are using animal waste from their own livestock or confined animal feed operations as a competitive source of nutrients for their plants. Manure is loaded with nitrogen, phosphorus, potassium, calcium, micronutrients, and organic matter, all of which help improve soil health.

A recent study by the USDA showed manure application has increased to 16.3% of U.S. cropland.

Winners and losers

Cattle, crude, and coffee got a kick upward early in the week and held on to most of their gains.

April cattle traded at $1.7510 per pound, with May crude oil going for $82.50 per barrel.

May coffee brought $1.9510 per pound. May wheat and corn spiked higher at Friday’s close to $6.85 and $6.67 per bushel, respectively.

Soybean oil and hogs were the biggest decliners, with both dropping around a penny and a half per pound.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso. He can be reached at 800-411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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