The market isn’t too concerned about inflation at the start of the week. Only time will tell if that optimism and bullish attitude can maintain until Friday.
For the equity market’s there is a triad of stories to focus on early in the week. Wall Street looks to be getting what is has desperately craved with another stimulus injection of cash with the passage of a Senate climate and health care bill. The House is expected to take swift action in getting their version of the bill passed. Then midweek the latest inflation gauge readings will be released with the CPI and PPI data. CPI is expected to be up 8.7% year-on-year in July, down from 9.1% the previous reading. The third leg of the stool is ongoing geopolitical saber rattling. This week attention is being focused on the US and China. China has announced another round of live military drills that have essentially cut Taiwan off from sea based imports. So far commercial air traffic has been able to navigate the complicated air space and still land in Taiwan. Taiwan is fairly self sufficient on food commodities, but is well short of domestic energy production.
In the grain complex USDA rang the sales bell first thing on Monday morning ahead of the open. Italy purchased 105,000 MT of new crop corn. Unknown destinations purchased 120,000 MT of new crop corn and China purchased another 132,000 MT of new crop soybeans. With the demand bulls fed the open was mostly in the positive. Then India announced mid morning that the country was considering slashing it’s 40% import tariff on wheat. That sparked the wheat bulls the rally. They were supported by the US Dollar index also being lower on the day.
Then the market started to wane mid session with weather bears fighting back against the bulls. The Eastern corn belt saw beneficial moisture over the weekend. Meanwhile the Western corn belt continues on hit and miss rain showers. That has most analysts thinking Monday’s crop progress report will show another decline crop condition ratings. That possibility wasn’t enough to bring the bulls back into the market.
In the livestock complex feeder cattle were the dominant leaders throughout the session. Differed feeder cattle markets are starting to show some signs of being overbought. However the bears haven’t pounced just yet. The August live cattle contract went into delivery on Monday. This will likely help boost the cash cattle market on the week. Otherwise packers face the possibility of deliveries against the contract.
The August lean hog contract goes off on Friday the 12th. There is currently a $21 gap between August and October for the lean hog contracts. That spurred fairly aggressive buying in the October on Monday. With that in mind though there is also a near $12 between the December and October contracts. This could cause continued volatility as one contract gets close to expiration.
In the country last week cash cattle started trading on Tuesday. There was trade clear through to Friday. Southern live deals had a range of $135 to $138.50, mostly $135 to $136, steady to $1 higher than the prior week’s weighted averages. Northern dressed business had a rather large range of $224 to $232, mostly $225 to $227, steady to $2 higher than the previous week’s weighted average basis Nebraska.
For the week ending July 30, 2022, Imported Beef Passed for Entry in the U.S. totaled 46,243, 102.51% of the previous week and 104.75% of the 4-week average.
Daily slaughter estimates Monday
119,000 hd today 124,000 hd wk ago 113,000 hd yr ago
458,000 hd today 408,000 hd wk ago 456,000 hd yr ago
Monday Midday Carcass Cutout
Choice up 1.79 266.41
Select up 1.15 239.82
C/S Spread 26.59
Carcass up 3.95 128.98
Bellies up 14.58 232.41
Pre-opening grains with Mark Gold 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 grain market commentary with Donna Hughes of Daniels Ag Marketing
Closing market commentary with Jack Fenske with York Commodities