Harvey, North Korea Could Help Markets

Hurricane Harvey and more saber rattling from North Korea could end up supporting agricultural commodity markets, along with oil and gas, in coming months, market analysts say.

Stefan Redlich, market analyst, wrote in an editorial for Seeking Alpha that the two could support a variety of stocks, but others say events are conspiring to support commodity markets as well.

Hurricane Harvey hit Rockport, Texas, with a category 4 storm over the weekend and promptly ran into a high-pressure system that stalled its advance inland to its death.  As the storm sat near the Gulf, it sucked up moisture from the Gulf and deposited it inland causing massive flooding on a scale not seen in decades, if ever.

News coverage quickly moved from the wind-wrought devastation along the coast to the flooding in the Houston area.  Houston has received about 50 inches of rain from this one event, and localized flooding is common with a two-inch rain.

That much flooding and wind damage had to have damaged local crops along with oil and gas refining capacity.  And with an area the size of Greece under water, shipping and land transportation infrastructure had to have been damaged as well.

And with Harvey moving back out over open water before making landfall again, many fear more rain and flood damage to come.

Any crops grown in the flooded areas may be a total loss.  Cotton likely won’t recover.  Soybeans and rice could be gonners as well.  A little corn might be salvageable, but it’s a major unknown as well.  The losses to crop production in the US may raise prices.




Ever since mid-March, the US dollar has weakened against major currencies.  For instance, the US Dollar Index has fallen 9.25 points, or 9.06%, in this period, a major decline, analysts said.

That makes US products more desirable to foreign buyers since they are cheaper in terms of their own currency.  And an old trader once had a maxim that when altered only slightly says to judge relative value in terms of foreign currency.

So, if foreign currencies are rising in relative value and storm damage is high enough, prices for major agricultural commodities could be supported.

The degree of support may be regulated by the ability of the barge and rail industries to get product loaded and sent out, and this is a big unknown at this point.  Foreign demand could be very large, but if all or most of the ports are damaged by Harvey, it matters little.




Cattle traded Wednesday on the livestock exchange video auction at $105.10 per cwt on a live basis for 1- to 9-day delivery and at $105 live and $166 dressed for 1- to 17-day delivery.

Light cash trading was reported in Nebraska’s dressed market at $165 to $166, down $7 from last week.

Cash cattle trading in the Central Plains last week was reported at $107 per cwt on a live basis, down $3 from the bulk of the previous week’s action.  Dressed-basis markets traded at $172 to $173, compared with $175 to $177.

The USDA’s choice cutout Wednesday was down $0.05 per cwt at $191.72, while select was up $0.33 at $191.12.  The choice/select spread narrowed to $0.60 from $0.98 with 83 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Tuesday was $143.34 per cwt, up $0.15.  This compares with Wednesday’s Aug settlement at $142.90, up $0.30, and the Sep settlement of $143.75, up $0.72.