Commodities Overview June 2023 Edition

MONTHLY FUTURES MARKET OVERVIEW

Read the complete June 2023 Edition HERE

Grains

In June, the USDA raised the U.S. corn carryout 35 mil bu, the soybean carryout 15 mil bu and left the U.S. wheat carryout unchanged. For the 2023/24 U.S. and world supply and demand estimates, the USDA estimated U.S. carryout at 2,257 versus 2,222 last month. The USDA raised the world 2023/24 corn carryout to 314.0 mmt vs 312.0 last month. The Brazil crop was estimated to be 129.0 versus 132.0 this year and Argentina was 54.0 versus 35.0. China’s corn imports were estimated to be 23.0 versus 18.0. The world corn trade is estimated to be 197.7 mmt versus 176.5 this year. The U.S. was estimated to be 53.3 or 27%.

Live Cattle

Cattle prices rallied throughout 2023 but during May 2023 price gains accelerated. At the end of April 2023 year-to-date U.S. federal cattle slaughter was down 3.1%, and it dropped to 3.4% by the end of May 2023. Cattle weights and grade fell in May. On May 1 the average weight for steers was 1,455 pounds. On May 31 the average live steer weight dropped to 1,410 pounds. The grading percent also fell in May. The combined steer and heifer carcass grade during May went from 83.5% choice to select, down to 81.8% choice to select.

Lean Hogs

Lean hog prices during May 2023 continued the decline that began with the contract high closing price on December 30, 2022 at $109.17/cwt. From the closing price in December 2022 to the contract low price, $76.07/cwt on May 26, 2023, June 2023 lean hogs fell $33.10/cwt. From May 1 to May 26, June 2023 lean hogs lost $13.62/cwt and ended the month on May 31 down $7.12/cwt.

Stock Index Futures

S&P 500 and NASDAQ futures hit new highs for the year. The most recent push higher was inspired by the May U.S. consumer price index report, which showed a 0.1% increase when up 0.2% was expected and on a year-to year basis the consumer price index was up 4.0% when a gain of 4.1% was anticipated. Recent strength was linked to the growing belief that the Federal Open Market Committee would pause its interest rate hiking cycle at the June 14 policy meeting. In addition, strength earlier in the month took place when a bill to raise the debt ceiling was passed.

US Dollar Index

The U.S. dollar index peaked in late May and trended lower in June. The reversal in prices was due to a change in rhetoric from Federal Reserve officials after comments from Fed Governor Philip Jefferson and Philadelphia Fed President Patrick Harker suggested the central bank will leave interest rates steady this month. There was additional pressure when the U.S. consumer price index report showed a smaller than expected increase.

Euro Currency

The euro currency trended lower in May as interest rate differential expectations tended to undermine the currency of the euro zone. However, the euro traded higher in June as comments from  European Central Bank officials became more hawkish.

Crude Oil

Crude oil futures fell after the EIA reported an unexpected increase in U.S. crude stockpiles last week. U.S. crude oil inventories surged by 7.919 million barrels, which is the most in 17 weeks and compared with market expectations of a 0.51 million draw. In addition, gasoline and distillate stockpiles increased by more than predicted. The IEA said in its monthly report that global oil demand will increase by 6.0% between 2022 and 2028. Also, the U.S. Department of Energy is planning to buy 3 million barrels of U.S. produced crude oil for the Strategic Petroleum Reserve for an average price of approximately $73 per barrel.

Gold

Gold futures declined over $150 an ounce from the peak hit in early May, mainly pressured by the growing belief that interest rates will stay higher for longer. Some of the selling was limited by the safe-haven component of gold in light of the debt ceiling impasse. Once the debt ceiling issue was resolved, some flight to quality longs were liquidated.

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