Commodities continue to twist and turn as the price volatility continues into 2021. As the world crawls out from the coronavirus lockdown in the coming months, demand for certain commodities will grow, with crude oil and beef coming immediately to mind. Attending summer festivals, gathering with friends and traveling to destinations are top of mind for many. Here's a look at three things to watch as February unfolds.

Cattle

Cattle futures have been inching higher over the past month with prices reaching $117.62 in the February contract, and $123.90 in the April contract. The theme of improved demand kept a supportive tone for the rally. Deferred contracts have also had a supportive tone thanks to news of lower placements, and lower cattle supplies available into third quarter. We feel the overall tone of cattle is supportive, yet a slight setback may be likely in the short term as heavy cattle coming to slaughter are providing plentiful beef production in the short term.

Crude oil

Prices continue to inch higher as demand grows as lockdowns are easing, with $60 per barrel crude oil on the horizon. China has been buying large amounts of its energy needs in recent month as prices have been historically low. Once prices reach $60 per barrel, traders will be eyeing various types of news from OPEC on production amounts, global demand, and lost U.S. production. If prices can clear the $60 hurdle on monthly charts, $80 crude by summer seems a possibility.

Calendar dates

The next USDA report for grains is on Tuesday, Feb. 9. This is a regular monthly supply and demand report. Most likely it will have a supportive tone as ending stocks continue to shrink. How much of that friendly tone may already be priced into the market is what needs to be monitored. The days following that report are also important.

The Chinese New Year begins on Friday, Feb. 12. For nearly a week much of the country is off from work, and spends time celebrating with friends and family. It will be interesting to see if China is an active grain buyer during this week.

Feb. 12 is also important as it is the last trading day before a three-day U.S. holiday weekend. On Monday, Feb. 15, the markets will be closed for President’s Day.

The last important event taking place in February is the USDA Outlook Forum, happening on Thursday, Feb. 18 and Friday, Feb. 19. Traditionally, USDA puts forth their first guesstimates for how many acres of grain will be planted in the U.S. this spring at this event. Expect big numbers. They also use trendline yields in their equations, so on paper, there will be the appearance of a potential for a large U.S. crop being planted this spring.

At least for the moment, the month of February seems to have an optimistic tone for the world versus last year at this time when the reality of coronavirus was beginning to spread. The question is: What lies ahead?

Reach Naomi Blohm: 800-334-9779 Twitter: @naomiblohm   and [email protected]

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The opinions of the author are not necessarily those of Farm Futures or Farm Progress.