Commodity Futures Trading

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Commodities Pressured By Rising Dollar Index And Uncertainties
By: Barchart | February 26, 2023

Commodities appear severely pressured by the rising dollar index and several factors coming into play with grains, livestock, metals and energies. We follow our precise entry/exit strategies for the short-term hedger with some commentary in the Ag and Livestock sectors:



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In the Livestock sector:

Lean hogs stayed net green for week, but saw Friday losses between 15~ 55 cents across the front months. From Friday to Friday April hogs were still up by 75 cents. USDA’s National Average Base Hog price was 15 cents stronger to $77.68. The CME Lean Hog Index for 2/22 was 20 cents stronger at $77.73.

Pork cutout futures went into the weekend with Friday losses up to $0.45. USDA’s National Pork Carcass Cutout value was $85.35, down by 68 cents. USDA estimated FI hog slaughter for the week through Saturday at 2.375m head. That is down from 2.505 million last 2.492m head during the same week last year. The YTD total of 20.068m head is 1.3% ahead of last year’s pace.

Cattle

Monthly reports from NASS had the cattle herd numbers pegged at 11.704m head on Feb 1 for the 1,000+ head capacity feedlots. That was a tad bit over 4.1% loss YoY compared to the average estimate of -3.5%. January placements were shown at 1.932m head, a 3.6% drop YoY compared to the average 2.9% expectation. The report had 1.847m head marketed in Jan, a 4.2% increase compared to the expected 3.9% increase. USDA mentioned 1,000+ head feedlots made up 82.5% of the total inventory on Jan 1, which was up from almost 82% share last year.

In the Grains sector:

Wheat

USDA reported 339K MT of wheat was sold for export during the week that ended 2/16. That was up from 209k MT last week, as a 4-wk high led by sales to the Philippines. By class, the report had 36% of the total sale as HRS with 24% each for white and HRW. Old crop wheat commitments were 16.85 MMT, trailing last year’s 17.98 MMT pace. New crop wheat has 413,461 MT on the books as of 2/16. The European Union took 400k MT off their wheat production estimates citing multiple reasons ranging from the war in Ukraine to weather and now at 126 MMT, and among other reasons calling out low soil moisture reserves into the growing season.

Beans

Soymeal sales were 65.5K MT for the week that ended 2/16, which was below estimates. Accumulated meal commitments were 7.553 MMT as of 2/16. Soybean oil bookings for the week were shown as 755 MT of net cancelations. Soy oil commitments were just under 51K MT as of 2/16. The BAGE lowered their estimate for Argentina’s soybean crop by 4.5 MMT to 38 MMT.

Corn

USDA’s FAS reported a 20% drop in weekly corn bookings with the first sub-1 MMT booking in 4 weeks. The Export Sales report had 823k MT of sales, which was within the range of estimates, as Japan bought 312k MT (including 137k MT switched from unknown) and Mexico booked 290k MT. The old crop book numbers are lower by 40% YoY and include 14.36 MMT of shipments and 14.28 MMT of outstanding sales. For new crop corn, there is 1.563 MMT on the books as of 2/16. Meanwhile, Brazil’s 2023 ethanol output is expected to increase 5.4% citing a better sugar crop and the need for domestic production following tariff implementation on U.S. ethanol. It is estimated that over half of Brazil’s 2nd crop corn has missed the “ideal planting window” as 18.2% of Parana fields. Argentina Corn crop estimates have also seen a lowered reading.

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