Cattle prices jumped this week to a one-month high in the past week, with August live cattle futures topping $1.09 per pound. Cash prices in the Great Plains are even higher, spurning hope for a further rally.

Feedlots and meatpackers all watch the price for cattle in Chicago, but local supply and demand factors can push local prices above or below the futures markets, a difference known as the “basis.”

U.S. inventory of cattle is near an all-time high, but falling figures for breeding animals and calf supply are signaling that herds will likely shrink in the coming years, creating a supply shortage and higher prices.

There is potential for additional beef exports to China if trade disputes are settled; due to the ongoing African Swine Fever in China, Chinese beef demand has blossomed, but they are primarily buying from Brazil and Australia, two of the United States’ major beef competitors.

Royal trouble in UK

The UK has selected a new leader, and financial markets are sour on the choice.

Boris Johnson, former mayor of London, was chosen July 22 to replace Theresa May as British prime minister. He has been a leading proponent of the British exit from the European Union, and his rise to power increases the chance of a “hard Brexit,” whereby the UK leaves the EU without a plan in place.

Market watchers expect a hard Brexit could cause a recession and further erosion in the value of the pound. Rising fears of economic catastrophe have caused the British pound to fall to a two-year low, trading Friday near $1.24.

For Americans, this means that a vacation to London or buying British goods will be less expensive, but U.S. firms that sell to the UK could see vanishing demand for their wares. The UK is fifth-largest buyer of American goods, and is a significant market for U.S. aircraft, machines, and agricultural products.

— Walt and Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, Kansas. This is not a solicitation of any order to buy or sell any market.