Dollar: The September jobs report pushed the dollar higher on Friday. The Dollar Index continued to climb back to levels from August, reaching 102.3 on Friday after bumping along around 100.0 the week before. The dollar posted a solid gain against the yen to 148.8 as buying increased after the September U.S. payroll report was released early in the day. The dollar also improved to 1.096 versus the euro after the Bank of England downplayed the need for another rate cut in the UK.
Treasuries: The September jobs report also pushed Treasury yields sharply higher on Friday as a 25-basis-point appeared more likely. The 10-year was nearly 3.98% late in the day after last seeing the 4.00% in late July. The 2-year moved up to the 3.92% range where it had been a month earlier.
Analysts said the increased chance of a 25-basis-points cut in November has raised speculation the Federal Reserve will also be less aggressive at its meetings in December and early next year. Meanwhile, Freddie Mac reported the average 30-year fixed mortgage rate increased last week to 6.12% from 6.08% the week before but was still below the 7.49% of a year ago.
Energies: Oil traders stocked up on crude futures Friday ahead of a potentially game-changing weekend in the Middle East. November WTI was up another dollar and pulling closer to $75 while December climbed above $74. November diesel traded as high as $2.35 for the first time since the end of August.
The possibility of an Israeli attack on Iranian refining capacity had the market foregoing profit-taking in favor of securing supplies. The week wrapped up with Israel continuing to pound Hezbollah in Lebanon, and Iran vowing not to back down after threatening to retaliate against the Gulf states’ refining infrastructure in the event Israel does indeed attack Iranian refineries.
Metals: Gold and silver futures finished lower on Friday but only after a sharp spike higher around midday. December gold made another run to $2,700 before sinking below $2,670 in the afternoon. The front-month October silver contract reached a new 1-year high above $32 on light volume while most-active November jumped to a 3-month high and made it above $33 for the third time since last May.
Analysts said silver benefited from possible increased future industrial demand as well as the overall support for metals emanating from the situation in the Middle East.
Livestock: Livestock futures were little changed on Friday with cattle creeping higher and hogs seeing a slight slump heading into the weekend. October and December live cattle traded around $187 with prices appearing to see support at $186 much of the week.
Analysts noted light cash trade Friday as prices remained firm while buyers apparently held off. November feeder cattle were a little higher at the end of the day at the 1-month highs above $249. The hog market was mostly steady Friday with December prices drifting slightly lower on light volume at just above $76.
Beef and pork production increased modestly last week, according to the USDA. The weekly production report estimated beef output during the week ending Oct. 5 at 524.3 million pounds (mp), a slight 0.3% improvement over the previous week. Pork production was 1.7% higher at 548.8 mp. For the year, beef production is down 0.7% and pork is 1.6% higher.
Average hog weights increased by a pound to 285 pounds while cattle weights went up to 1,411pounds from 1,404 a week earlier; the average a year ago was 1,373 pounds.
California became the 15th state in the nation where human cases of avian flu from dairy cattle have been detected. Two individuals in the Central Valley tested positive after contact with dairy cattle, the state announced last week. California has joined the list of states where avian flu has infected people. Avian flu has been found in dairy herds in 14 states. Officials have urged dairy farmers nationwide to be on alert as the fall bird migration continues.
Live Cattle: The cash market appeared slow much of Friday with packers reportedly holding back on procurement for now as weights increase further. The slaughter wrapped up the week at 611,000, modestly behind last week and trailing the tally from a year ago of 627,495. Analysts suspect China may buy more U.S. beef this week to replace supplies that were drawn down during last week’s fall festival.
Feeder Cattle: Feeder prices were $1-$4 higher in Oklahoma last week as higher futures prices bumped up demand. The nagging drought in the southern Plains has apparently not dampened calf demand. Demand was also solid in Texas where prices for some calves increased as much as $10. The latest CME Index price was $246.78 on Thursday compared to $248.25 the day before.
Lean Hogs: The late Friday cutout price was down slightly at $94.31 and about a dollar below the 5-day average. Last week’s slaughter totaled 2,586,000 compared to the previous week’s total of 2,552,000. Soybean meal futures continued to slide lower on Friday and were back to the levels prior to last month’s rally.