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DJ Global Commodities Roundup: Market Talk

· 02/05/2021 18:19

The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.

1816 EST [Dow Jones] -- Chipotle Mexican Grill Inc. is preparing for an increase in the federal minimum wage, Chief Financial Officer Jack Hartung said Thursday. "We assume it will happen and we are prepared for it," Mr. Hartung said, adding that the restaurant chain would look to pass on some of the cost increases to its customers. President Joe Biden during the election campaign proposed raising the federal minimum wage to $15, up from $7.25 currently. Chipotle pays its restaurant workers on average $12 to $13 per hour, Mr. Hartung said. (Nina.Trentmann@wsj.com)

1530 ET - Livestock futures on the CME capped off trading this week with an up day--as live cattle futures gain 0.1% to $1.23775 per pound, and lean hog futures finish up 1.3% to 80.3 cents per pound. For hogs, the uptick in futures--the third time in the past four sessions--comes as hog weights have been on the decline, possibly a reaction to high costs for feedstock. "As producers look to minimize feed costs part of the offset could possibly be a reduction in feed efficiency leading to lower dressed weights and reduced pork supplies," says Steiner Consulting Group. (kirk.maltais@wsj.com; @kirkmaltais)

1455 ET - Natural gas prices fall late in the session to end 2.5% lower at $2.863/mmBtu due to some forecasts for less-severe-than-expected cold weather this month. Prices rallied above $3 intra-day, adding to a weeklong rally, but failed to hold onto those gains as the session drew to a close. Prices still ended with an impressive, 12% weekly gain, the most since late October. Analysts say part of the reason for the pullback in prices is that the market had built into the price firm expectations for an extremely cold February, and investors worry the forecasts will continue to mellow in the coming days, as often happens. (dan.molinski@wsj.com)

1442 ET - Brazilian beef exports declined 6% in volume in January from a year earlier to 127,139 metric tons and fell 11% in terms of revenue to $549M in the period, according to the meatpackers association. China and Hong Kong together were the biggest buyers of Brazilian beef, and total exports to the two of them rose to 79,896 tons from 76,965 tons a year earlier. Chile was the second-biggest foreign buyer of Brazilian beef, but exports to the South American country fell 16.6% to 5,168 tons, while sales to third-biggest buyer Egypt fell 13.5% to 4,501 tons. Brazil was the world's biggest beef exporter in 2020 through October, according to the USDA. (jeffrey.lewis@wsj.com)

1439 ET - US benchmark oil prices make it a perfect week, closing higher all five sessions as they end up 1.1% at $56.85 a barrel, the highest level in a little more than a year. WTI crude finishes with an 8.9% weekly gain, the best week since early October. "The move speaks to the ongoing strength of a broader rally that has carried over from late 2020, largely pushed forward by broader market optimism and the start of successful vaccine deployment," says Schneider Electric's Robbie Fraser. "Near-term, inventory draws from the US and China have brought some bullishness to a demand side." OPEC support for a tighter market has also helped, he adds. (dan.molinski@wsj.com)

1333 ET - Wheat futures trading on the CBOT are leading grains higher, based off of livestock producers buying more wheat for animal feed purposes. "Soy/wheat futures push higher on firming cash basis and feedlot demand for new crop wheat in the Plains," says AgResource. "Remember that wheat holds a protein advantage to corn and offers 10% more ruminate feed value." Wheat futures have been on a slide in February, sinking 3.2% since February 1 -- making wheat more attractive as a feed ingredient for livestock. (kirk.maltais@wsj.com; @kirkmaltais)

1258 ET - US farm income will drop 8% in 2021 as historic government payments fade, according to a US Department of Agriculture forecast. Direct government payments, which soared to a record $46B under the Trump administration, will be cut nearly in half this year, pushing net farm income to $111B, USDA said. Those payments comprised nearly 40% of farmers' incomes in 2020 as the former administration sought to stem farmers' losses from the coronavirus pandemic. Higher production costs, particularly for animal feed, fertilizer and labor, also will weigh on farmers' earnings this year. However, sharply higher prices for major agricultural commodities are expected to help offset the drop-off in federal support, with cash receipts for corn and soybeans projected to increase by 19% and livestock receipts up by 5%. (jesse.newman@wsj.com; @jessenewman13)

1257 ET - Ahead of next Tuesday's WASDE report from the USDA, grains traders are getting themselves into position - anticipating a reduction in ending inventory forecasts for US row crops. "Traders generally expect the agency to further tighten its domestic and global balance sheets for soybeans, corn and wheat - especially soybeans," says Arlan Suderman of StoneX. "That has speculative traders reluctant to be short the complex for now." In trading on the CBOT Friday, wheat futures are up 1.1%, while soybeans are up 0.3% and corn is down 0.1%. (kirk.maltais@wsj.com; @kirkmaltais)

1216 ET - Base metals are set to end the week higher, lifted by vaccine and stimulus hopes on Friday. Three-month copper on the LME is up 1.6% at $7,937.50 a metric ton and set for a weekly gain of 1.4%. Metals traders are awaiting the Chinese New Year holidays set to begin next week and are trying to gauge what impact they will have on metals prices. The period is typically weak for demand, but with the nation recently experiencing one of its worst Covid-19 outbreaks in months, restrictions on activity this year could deal a bigger-than-normal blow to metals demand, says Ed Meir, metals consultant at ED&F Man. (william.horner@wsj.com)

1138 ET - More corn and soybean acres are anticipated in the US in the upcoming growing season. However, while higher prices for row crops is the main incentive for farmers to plant more, it will be dependent on how South American crops fare. "A fair amount of uncertainty remains in the back of many producers' minds amid dry South American weather forecasts, Chinese demand, and ever-present pandemic volatility," says Farm Futures, citing the results of its January survey of 806 US farmers. According to survey respondents, corn acres may total 94.7 million acres this crop year -- which if realized, the third largest acreage over the past 75 years. Meanwhile, 84.5 million acres of soybeans may be planted this spring, according to survey data. (kirk.maltais@wsj.com; @kirkmaltais)

1119 ET - Double-digit inflation has come quickly to gasoline prices, with the average US price at the pump up 10.2% from Jan. 1, to $2.47 a gallon, and 17% higher since prices began surging in early November, according to price-tracking app GasBuddy. Rising oil prices that have jumped 16% year-to-date and are near a one-year-high $60 a barrel are fueling the spike in gasoline prices this winter, a season that typically sees lower fuel prices. GasBuddy's Patrick DeHaan tells drivers not to expect much relief on the horizon, and cautions "the real pinch could come in March and lasting through summer." (dan.molinski@wsj.com)

1002 ET - Livestock futures opened trading on CME mixed - with live cattle futures down 0.3% and lean hog futures up 0.2%. The mixed picture comes as cold weather lingers in the US, which could affect the eating habits of livestock. "We'll have some frigid temps all next week that'll be cold enough to impact animal performance as well and likely further contribute to lighter carcass weights," says StoneX. Lower-than-average temperatures is expecting to persist through the next 10 days, according to DTN. (kirk.maltais@wsj.com; @kirkmaltais)

(END) Dow Jones Newswires

February 05, 2021 18:19 ET (23:19 GMT)

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