Volatility Reigns as Macroeconomics Take Over from Fundamentals May 23, 2022
Where and when will new crop prices top out? For over two years, fixated on short supplies and endless demand, traders have driven December futures to continuous new highs. The most recent was last Monday when it hit 133.79. However, it was revealed last week the demand side of this equation may be weakening.
Today’s trading action showed that July and December might be headed in different directions. While July is dealing with a structural issue as mills are being forced to fix, new crop has different dynamics and is facing the long game, which includes a deteriorating demand outlook that hasn’t been factored into the price yet.
Market Movement from 16th May 2022 to 21st May 2022.
• This was highly volatile week in NY future. Market moved intraday 500 to 700 points daily. NY July got high of 151.95 and low of 141.13. Ultimately NY July closed with weekly loss of 293 points. Dec also closed with weekly loss of 281 points. July December inverse with minor changes remained almost unchanged.
• Export sales was better for current year but lower for next year. Shipment still lower and lagging behind to meet the USDA target.
JULY AND DECEMBER FUTURES FIND SUPPORT TOWARDS THE END OF THE WEEK
• INFLATION READINGS ARE STILL COMING IN ABOVE EXPECTATIONS • U.S. EXPORT SALES FINALLY SEEMED TO SLOW DOWN • MAY WASDE REPORT RELEASED • WHILE PRECIPITATION WAS HELPFUL, DROUGHT CONDITIONS STILL CONTINUE TO PREVAIL
July futures continued to move lower last Friday and on Monday, but seemed to find support on Tuesday and were able to recoup some of the week’s losses from there. The nearby contract settled at 145.53 cents per pound on Thursday, down 323 points for the week.