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Top 5 key market movers to watch the week of July 23rd 2023

Top 5 key market movers to watch the week of July 23rd 2023

This week there are 5 key reports to watch that could have significant impacts on commodity markets the week of July 23, 2023. This column tracks key events in commodity marketing impacting the agriculture industry! The series of article shares issues to watch the following week, issues that may have an impact on commodity prices in the coming weeks.

By Colin McNaughton Risk Management Intern

1. The weekly USDA crop progress report will be released on Monday, July 24th. The recent crop progress report showed improvements for both U.S. corn/soybean conditions but remained below average. U.S. soil conditions also improved but markets still rose as its not about what just happened but what may happen in the future.

A wetter 3-weeks past provided better crop conditions, but a dry weather forecast for end of July/August is not looking promising.

U.S. corn and soybeans both sit at 13% poor-very poor after dropping 1% and 2% respectively. Michigan saw some major improvements in corn and soybeans at 14% and 15% poor-very poor, down from 22% and 27% in the prior week. However, the upcoming report is unlikely to show continued momentum as we have had some dry weather over the last week particularly in the U.S. Northern Plains and Western Corn Belt.

2. Next week will see the USDA grains inspected for export report released on Monday, July 24th, the EIA ethanol data on Wednesday, July 26th, and the USDA weekly export sales report on Thursday, July 27th. Grains inspected for export were very weak compared to this time last year. 363,000 mt of corn was inspected compared to 1.08 mmt last year, soybeans stood at 155,000t compared to 438,000 mt last year, while wheat was at 253,000 mt, an improvement from last years m 193,000 mt. It is unlikely that we will see any change in trend for these numbers in the upcoming report. U.S. corn for ethanol us is down 3.8% vs. last year.

3. The weekly USDA drought monitor map showed some improvements this week after the recent rains, but they were not drought busting. U.S. corn in a drought stands at 55% down from 70% just 3 weeks ago while U.S. soybeans in a drought are at 50% down from 67% in the same period of time.

The U.S. Midwest did see some significant improvement as the D1 affected area dropped nearly 10% and sits at 54%, and the D2 affected areas was reduced by just over 7% and sits at 19%. More specifically, Minnesota worsened as now 70% is affected by D1 conditions and 18% affected by D2, up from 63% and 11% respectively. WI. MN and IA remain 100% in an abnormal Do-D! drought!

4.According to a poll of 106 economists conducted by Reuters, the U.S. Federal Reserve is expected to raise its benchmark overnight interest rate by 25 basis points at next weeks U.S. Fed meeting, bringing it to the range of 5.25% to 5.50% on July 26. The majority of economists believe that this will be the final increase in the current cycle of rate tightening.

Despite a robust economy and historically low unemployment, the Fed's aggressive rate hike campaign has surprised analysts and investors. Inflation has been slowing down, with the consumer price index (CPI) dropping from 4.0% in May to 3.0% in June. This has led some experts on Wall Street to speculate that inflation could be under control, leading to predictions of potential rate cuts by the end of 2023.

The ongoing debate revolves around whether further rate increases are necessary to maintain a slowdown in inflation or if such actions could harm the economy unnecessarily. While overall inflation has eased, underlying core inflation has remained higher. Are they overdoing it?

5.USDA cold storage report will be released next week July 25th, 2023. Last month’s USDA Cold Storage update said that total red meat supplies in freezers were down 7% from the previous month and down 11% from last year, to 975.310 mil pounds. Summer demand tends to eat away of supplies in cold storage and a seasonal decline during this time of the year is normal. The slowdown in U.S. bacon demand from foodservice remains a big challenge but it has improved lately.

For daily information and updates on agriculture commodity marketing and price risk management for North American farmers, producers, and agribusiness visit the Risk Management Website to subscribe to the program.

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