Written Commentary
MONTHLY FUTURES MARKET OVERVIEW
>>Read the full March 2024 Edition HERE
Grains
U.S. corn ending stocks were left unchanged at 2.172 bil. in the USDA’s March WASDE report. We were looking for a 25 mil. bu. reduction on increased usage for ethanol production. The average U.S. farm price slipped $.05 to $4.75 bu. Global ending stocks for 2023/24 are forecast to increase to 319.6 mmt from 301.6 mmt in 22/23, slightly below expectations and down 2.4 mmt from the February 2024 WASDE report. U.S. soybean ending stocks were left unchanged at 315 mil. U.S. wheat ending stocks rose 15 mil. bu. to 673 mil. due to a drop in exports. Expectations were for stocks holding steady.
Live Cattle
Cattle numbers continued to fall in February 2024. USDA reports estimated the U.S. inventory was 87.2 million head, the smallest inventory since 1951. Feeder cattle numbers were estimated to be down 4.2%, which is the lowest level since 1972.
Lean Hogs
Because of drifting snow-blown roads and subzero temperatures in January, the U.S. hog slaughter dropped and was down 1.4% year-to-date at the beginning of February 2024. However, with no delays in February, slaughter schedules picked up the delayed hogs of the previous month, and by month-end February slaughter was up 1.3%, and over a quarter of a million more hogs year- to-date.
Stock Index Futures
Stock index futures have been strong this year, including recent record highs for S&P 500 and NASDAQ futures. However, there was selling when the February consumer price index, excluding food and energy, came in at up 0.4% when a gain of 0.3% was anticipated, and also when the February producer price index report showed an increase of 0.6% when up 0.3% was forecast, and the producer price index, excluding food and energy, advanced 0.3% when a gain of 0.2% was estimated.
US Dollar Index
The U.S. dollar index was strong in January and early February due to the consensus view that the Federal Reserve may be slow to reduce its fed funds rate this year. However, the greenback topped on February 13. Economic reports have been mixed. Nonfarm payrolls in February increased 275,000 when up 190,000 was expected, and private payrolls were up 223,000 when a gain of 150,000 was anticipated.
Euro Currency
The euro currency bottomed in the second week in February. Economic reports have been mixed. German industrial output increased 1.0% month-over-month in January 2024, marking the first expansion in nine months and surpassing market predictions of 0.6% growth. Factory orders in Germany shrank 11.3% month-to-month in January 2024, which was worse than market forecasts of a 6.0% decline, after an upwardly revised 12% gain in the prior month. This was the steepest drop in six months. Industrial producer prices in the euro area decreased by 8.6% year-on-year in January 2024, from a revised 10.7% drop in the previous month.
Crude Oil
Crude futures advanced to above $80 per barrel on March 14, propelled by a report from the American Petroleum Institute indicating a significant reduction in U.S. crude oil stockpiles. The API data showed a 5.5 million barrel decline in inventories for the week, marking the first drop in seven weeks. In addition, the report highlighted a decline of almost 1 million barrels at the Cushing hub in Oklahoma, alongside lower gasoline and diesel stocks.
Gold
Gold advanced to new historical highs on March 8. However, some of the gains were given back recently due to stronger than anticipated U.S. inflation data, which further clouded the outlook for when the Federal Open Market Committee will begin pivoting to accommodation.
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