Commodities Overview Sept 2022 Edition

FUTURES MARKET OVERVIEW

Read the September 2022 Edition HERE

Grains

The USDA’s September report was bullish for corn and soybeans and negative for wheat. The USDA’s new estimates of the U.S. 2022 soybean and corn crop yield and acres were below trade estimates. This suggested lower crops and carryouts. Commodity prices are also trying to adjust to talk of recession, a higher U.S. dollar and lower energy prices. China continues to be a major influence on soybean and soyoil prices. There is talk that the Biden administration could impose new sanctions on China.

Live Cattle

Inflation is one reason given for high beef prices, but consumer beef demand in 2022 has been strong. People with low incomes buy cheap beef products such as ground beef, and there are consumers who don’t feel income restricted with rising prices and buy choice and prime heavily marbled steaks and roasts if and when desired.

Lean Hogs

August 2022 lean hogs began the month with a continuation of the rally that began July 1. August 2022 lean hogs rallied in July $17.67/cwt and continued moving higher up to when August 2022 lean hogs expired on August 12 and settled at $122.75/cwt. However, when August 2022 lean hogs expired, and October 2022 lean hogs became the lead month, traders quickly reversed positions and lean hog futures fell.

Stock Index Futures

Stock index futures advanced to four-month highs in August despite Federal Reserve officials discussing a faster timetable for raising interest rates this year. However, selling pressure developed in September as Federal Reserve officials’ comments became more  hawkish.

US Dollar Index

The U.S. dollar index advanced to a 20-year high in mid-September as interest rate differential expectations drove the greenback higher. Most of the strength was linked to Federal Reserve officials indicating a readiness to take more aggressive steps to bring inflation under control as most inflation measures have come in hotter than expected.

Euro Currency

The euro currency declined to the lowest level in 20 years in early September, falling to below parity against the U.S. dollar. Pressure on the euro was linked to a growing disparity between the European Central Bank and Federal Reserve policies, economic and political concerns, which could make it more difficult for the European Central Bank to tighten monetary policy.

Crude Oil

Crude oil prices topped in early June, falling from the 115 area toward their lowest in three months to just under 81. Much of the weakness is linked to falling global demand.  The market fell sharply as a result of weak U.S. housing and manufacturing data that some economists say point to recession.

Gold

Gold futures trended lower since August 10 as Federal Reserve officials ramped up their hawkish rhetoric. In addition, the stronger U.S. dollar, has been a headwind.