Corn and soybean prices finally stabilized on Friday, keeping nearby futures off March lows. The USDA's World Agricultural Supply and Demand Estimates (WASDE) report had minimal impact on the market, with average cash prices for corn and soybeans being lowered. Hopes for a rally to help farmers holding old crop inventory are still alive, but the spark for a surge is either well down the road or will take blowing up the road with unpredictable headlines. The weather, particularly the transition from El Niño to La Niña, could be a bullish factor for new crop prices. The recent Consumer Price Index (CPI) reading affected multiple markets, including crude oil, currencies, and gold. The rally in the dollar index reflected higher interest rates and risk aversion, making it harder to attract more commodities to the rally.
CoBank Knowledge Exchange (CoBank) published their first quarterly report of 2024, noting strong labor and consumer spending have led many experts to dismiss concerns of a recession. However, there is still unease regarding the U.S. economy, including higher-than-ideal inflation and interest rates. Beef prices are expected to remain high due to high consumer demand and a low U.S. cattle inventory. Lean beef trim values have skyrocketed, and the U.S. beef trade deficit is projected to widen in 2024. Pork production has turned a profit again after 17 consecutive months in the red, with improved margins for wean-to-finish operations. Domestic and foreign demand for pork has increased. The broiler industry is expected to straighten out in 2024, with easing input costs and appreciating prices. Dairy futures prices indicate 2024 could be the third-highest milk price year on record, but demand has been sluggish. Grain and oilseed prices have continued to decline due to a strong U.S. dollar and ample domestic inventory. Cotton prices rose 15 percent, leading to an expansion of cotton acreage. Sugar prices climbed due to weather conditions impacting production, while rice prices fell but still hold a historically large price premium over soybeans. [aed912be] [fc04f600]
Wall Street veteran Peter Borish of Computer Trading watches the 'seven Cs' of commodities for clues in uncertain markets. He keeps a close eye on the prices of the 'seven C's': cattle, coffee, corn, copper, cotton, crude oil, and currencies. Borish believes the Fed is boxed in by rising prices and a potentially weak consumer. He also notes that the S&P 500 averages a 10% drop each year. With a potential breakout on tap for seasonal commodities like cattle and corn, he is watching an 'eighth C' on his list: the consumer. [f07adb2c]
The NAB Rural Commodities Index increased 1.4 percent month-on-month in May, driven by rising prices for wheat, barley, canola, and lamb. Wheat prices rose over 10% due to poor seasonal conditions in Europe. Canola and feed barley prices also increased in May. Trade lamb prices rose nearly 3% due to strong domestic demand. Cattle prices were little changed. Seasonal conditions were mixed across the country in May, with national rainfall below average. The RBA left the cash rate unchanged at 4.35% in June. NAB expects a first rate cut in November. The AUD is expected to appreciate against the USD in the second half of 2024 and into 2025. The NAB Rural Commodities Index is based on the price and production data for 28 commodities. [d2de7cbc]