Daily market commentary

Daily market commentary
May 24th, 2022 | Rural Radio Network Staff

The last full week of May is here and the bulls felt like stretching their legs on Monday. Which was a strong turn of sentiment from last week with high volatility and bearish sentiment. The S&P 500 flirted with bear market territory, but is trying to give itself more distance from that mark.

For equities fear of recession continues to push the panic button for traders. The Fed continues to push for higher interest rates in the US to try and rein in inflation. Meanwhile the European Central Bank is still working with negative interest rates and are hoping to be at 0% by September. Then positive interest rates soon after September. That is what has continued to make US treasuries and the Dollar an attractive investment to global traders. Monday the US dollar did break back below the $103 mark and neared $102 through. That could help to perk of US exports somewhat.

In the grain complex Monday was a reversal of Friday. Corn and wheat ended higher while soybeans were lower on the day. Wheat was sent higher again on global supply concerns. Over the weekend Russia refused to work with the UN on letting grain out of Ukraine. For the corn and soybeans it seemed to be a spread trade unravelling on Monday. Monday’s crop progress report will be closely watched to see how corn planting is progressing in the US. For the Northwestern portion of the corn belt it is starting to near a time that acres not available to plant corn in will quickly go to soybean production. So the possibility of more soybean acres put pressure on the market.

However in the big picture it was the reality of a nearly 200 million bushel carryout for soybeans last week that seemed to support the market. So the selling pressure in soybeans seems to be looking for that excuse to move back higher.

Also supporting the corn on Monday was China taking large deliveries of corn rather than soybeans. According to USDA China received 31.2 million bushels of corn, 6 million bushels of soybeans, and 7.7 million bushels of grain sorghum. This year’s Chinese corn imports continue to exceed the previous year’s level thus far, even though both USDA and China forecast smaller shipments. 

In the livestock complex Monday’s trade is less negative than what many analysts were expecting after Friday’s cattle on feed report. The report showed the most cattle on feed in the US since the report started in 1996 at 12 million head. That was up 2% from the previous year and slightly above analyst estimates. Compounding the bearish sentiment was the placements of over 1.8 million head just 1% less than 2021. That was well over the average analyst estimate.

Despite this negative data the market turned higher with the data possibly being priced ahead of the days trade. Mike Zuzolo highlights more of this in his midday market commentary podcast below.

Lean hogs continue to rally on supportive trade news from Mexico and a strong carcass cutout.

In the country last week the majority of the trade took place on Tuesday. Southern live trade had a range of $136 to $139, mostly $138, $2 lower than the prior week’s weighted averages. Northern dressed deals had a full range of $223 to $228, mostly $226, $3 lower than the previous week’s weighted average basis Nebraska.

For the week ending May 14, 2022, Imported Beef Passed for Entry in the U.S. totaled 51,010, 100.50% of the previous week and 103.15% of the 4-week average.

Slaughter Estimates Tuesday

Cattle

125,000 hd today 125,000 hd wk ago 122,000 hd yr ago

Hogs

473,000 hd today 477,000 hd wk ago 482,000 hd yr ago

Tuesday Midday Carcass Cutout

Beef

Choice up 0.64 264.92

Select up 1.91 246.14

C/S Spread 18.78

Loads 77

Pork

Carcass up 0.81 107.86

Bellies up 5.62 173.30

Loads 164

Pre-opening grains with Ed Dugan of Top Third Ag Marketing

Pre-opening livestock with Jerry Stowell of Country Futures

Midday market commentary with Mike Zuzolo of Global Commodity Analytics

Closing market commentary with Jack Fenske with York Commodities

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