Futures File 

October 30, 2020

Cattle Jump on Hoarding Rumors

Fears of shopping difficulties and food shortages during this new wave of coronavirus cases triggered a midweek surge in beef and cattle prices.

A trend may be starting, at least in Europe, much like the buying panic in March backed by fears of shut-ins and regional lockdowns. Lower cost cuts of meat seem to be popular among those who anticipate interruptions in supply, distribution, and transportation to support their desire for meat. Heavyweight cattle in feedlots could temper the rally as supply could meet demand if the buying surge diminishes.

As of midday Friday, cattle for delivery in December were up about 5 cents per pound. 

 

Oil Driven Down by Lockdowns 

Crude oil and gasoline prices tumbled all week as rising coronavirus fears and lockdowns spread throughout Europe with France announcing a near complete shutdown of transportation, restaurants, bars, and non-essential shops.

U.S. airlines continue to look shaky, which could sap demand. Meanwhile, the largest North American oil producers announced plans to lay off as many as 50,000 workers. December West Texas crude fell to $35.00 per barrel on Friday, the lowest level since June.

 

Stock Futures Spooked by COVID 

Stocks got smashed all week with the blue-chip Dow Jones stock index futures suffering the worst.

The large wave of virus cases in the U.S. accelerated economic uncertainties and turned buyers to sellers. Layoffs, bankruptcies, liquidation, and fear are replacing confidence and optimism that COVID infections would be diminished or that a vaccine would be developed and distributed.

As Election Day looms, political uncertainty is weighing on investors as well, especially if the presidential race is not clearly decided.

By noon on Friday, the NASDAQ had lost 650 points during the week, the December S&P was down 200, and the Dow Jones December futures contract lost nearly 2,000 points. 

Traders and speculators should remember that extreme volatility could occur during the election and pandemic period and reduce risk exposure by hedging, trading smaller, or adapting risk reduction strategies.

 

Don’t Forget to Fall Back

Most of America will be falling back to Standard Time, setting their clocks back one hour before they go to bed Saturday Night.