MONTHLY FUTURES MARKET OVERVIEW
Read the May 2023 Edition HERE
In May the USDA raised the U.S. corn carryout 75 mil bu, soybean carryout 5 mil bu and left the U.S. wheat carryout unchanged. In its first 2023/24 U.S. and world supply and demand estimates, the USDA estimated U.S. 2023 corn crop at 15,265 mil bu versus 15,120 expected and 13,730 last year. Feed and residual was estimated at 5,650 mil bu vs 5,275 this year. The USDA usually raises residual if the crop is larger. The USDA estimated U.S. ethanol at 5,300 versus 5,250 this year. Exports were estimated at 2,100 versus 1,775 last year. This left the U.S. 2023/24 carryout at 2,222 versus 1,417 this year. The USDA raised the world 2023/24 corn carryout to 312.9 mmt vs 297.4 this year. The USDA estimated the 2023 U.S. corn crop at 387.7 mmt versus 348.7 this year. Brazil was 129.0 versus 130.0 and Argentina 54.0 versus 37.0, the China crop at 280.0 versus 277.2 and imports at 23.0 versus 18.0.
Throughout 2023 USDA Cattle on Feed Reports have shown there are fewer cattle on feed and lower placements, and it is exactly what happened pushing April 2023 live cattle to new contract highs.
Hog prices in April 2023 were in a continuation of the steep decline that began December 28, 2022. From the close on December 28 to settlement price on April 17, 2023, April 2023 lean hogs lost $24.70. In April, the April 2023 lean hog contract dropped $3.37 of the total decline. Hog slaughter in the U.S. year to date was up 1.7%, which was one reason for the steep decline as well as increasing world production and slaughter in China and Brazil. Extremely high hog prices in 2021 and 2022 encouraged global hog production along with China’s goal to increase and to eventually become self-sufficient.
Stock Index Futures
S&P 500 and NASDAQ futures advanced to new highs for the year despite a variety of bearish news, along with a hawkish Federal Reserve. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said interest rates may have to increase from here and that he does not want to say that they are done hiking rates. In addition, there has been only temporary pressure on futures due to the debt ceiling impasse and recent strains in the international financial system.
US Dollar Index
The U.S. dollar fell to a two-month low in April on the belief that the FOMC could moderate its hawkish monetary policy later this year. Much of the selling at that time was linked to evidence of a moderating inflation outlook. The March consumer price index increased 0.1% when a 0.3% gain was expected. The March producer price index declined 0.5% when unchanged was anticipated, and the producer price index, excluding food and energy, fell 0.1% when an increase of 0.3% was predicted.
The euro currency peaked on April 26 and has remained under pressure in May.
Crude oil temporarily extended gains as U.S. crude inventories fell. The weekly EIA report saw a huge 12.5 million-barrel drop in U.S. crude oil inventories, which was the largest week-on-week decline since late November. Some analysts believe energy commodities overall will start pushing higher as the summer driving season kicks off. On top of that, the U.S .Department of Energy plans to purchase 3.0 million barrels of crude oil to replenish the Strategic Petroleum Reserve in August.
Gold futures declined over $130 an ounce from the peak hit earlier this month, mainly pressured by the growing belief that interest rates will stay higher for longer. Federal Reserve Bank of St. Louis President James Bullard suggested the possibility of raising rates by another half-point this year, while Minneapolis Federal Reserve President Neel Kashkari described the decision to pause or hike rates in June as a close call. In addition, a stronger U.S. dollar in May contributed to pressure on gold prices.
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