Written Commentary
MONTHLY FUTURES MARKET OVERVIEW
Read the February 2023 Edition HERE
Grains
The February USDA report held few surprises for the market. After the report, corn, soybeans and wheat prices traded mixed. May soybean futures rallied from 15.00 to 15.46, then dropped to 15.10. May soymeal traded between 465-488. May soyoil traded between 50.94-61.97. May corn rallied from 6.67 to 6.84 and May Chicago wheat traded from 7.59 to 8.07 and then back to 7.73.
Live Cattle
When the December holidays were over, boxed beef prices in January 2023 fell as consumers backed off buying high priced beef, primarily roasts like prime and choice rib roasts. The rally in beef that began in October 2022 through the end of December 2022 was led by rib sections that drove boxed beef higher, but it ended as the new year began. On December 30, 2022 primal rib sections were $544.77/cwt and the choice composite beef price was $281.98/cwt.
Lean Hogs
Lean hog futures topped on December 27, 2022 and went into a steep decline in January 2023. February 2023 lean hogs, the lead month, from the high on December 27 at $91.60/cwt to January 31, 2023 fell to $73.55/cwt. The hog market dropped as pork prices declined and from a negative Hogs and Pigs report. Lean hog futures traders were surprised the last week of December 2022 when the USDA Hogs and Pigs report estimated producers kept hogs for breeding at 100% and farrowing intentions were estimated at 100 to 101%.
Stock Index Futures
S&P 500 futures advanced to a six-month high in early February on the belief that the Federal Open Market Committee could moderate its hawkish monetary policy later this year. However, futures declined more recently on prospects of a more hawkish Fed on news that January nonfarm payrolls increased 517,000 when up 185,000 was anticipated.
US Dollar Index
The U.S. dollar index fell to a 10-month low earlier this month. Pressure on the greenback was linked to bearish U.S. producer price index and retail sales reports. The greenback was also undermined by news that the January Empire State manufacturing index was -32.9 when -8.1 was predicted. These reports suggested the Fed may not be as hawkish as their rhetoric indicated.
Euro Currency
The euro currency advanced to a 10-month high in early February due to mostly stronger than expected economic reports. However, there was some pressure on the euro on news that annual wholesale price inflation in Germany eased to a 20-month low of 10.6% in January of 2023 from 12.8% in December 2022.
Crude Oil
Since December, March 23 crude oil futures have traded in a range between 70.56 and 83.14. Concerns about sluggish near-term demand, especially in the US, prompted investors to unwind some long positions after a rally that saw prices hit a peak of almost $81 on February 13. The latest EIA report showed that U.S. crude inventories jumped by 16.283 million barrels to 842.973 million last week, which is the highest level since early October, indicating weakening demand.
Gold
April gold futures bottomed at 1836.60 on February 16, which is a level not seen in more than a month. Selling pressure was linked to a stronger U.S. dollar and a pickup in Treasury yields after hotter than expected inflation data increased concerns about a more aggressive Federal Reserve.
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