The US dollar bolts to need highs again overnight.
Friday is magnifying the deflationary trend of the week, with the US dollar bolting to new highs over 112.11 overnight. This is created a complete risk-off mentality across all equity and commodity sectors. With exports so poor and the strength of the US dollar, soybeans and corn pricing are already back to near the lows of the week by Friday morning. Wheat prices are in retreat as the world awaits the outcome of the referendum and the reaction that the West creates to Russia if it wins an annexation of Eastern Ukraine.
The Federal Reserve said it is at “war” with inflation and will raise rates again in its November meeting, with many deducting it will be another .75% rate hike. The feds funds rate is on its way to 4.50 % by the beginning of 2023. This is now bursting asset bubbles with even crude oil this morning, making a new down trending low since the March high (80.35 low). Bullish Goldman Sachs was out this morning, projecting the S&P can decline to 3150 (currently 3720).
Russia has gone forward with the referendum that could annex E Ukraine into a new Russian territory. Although Ukraine is urging its citizens to vote against the measure, it’s a foregone conclusion that the referendum will pass with the majority of the Ukrainians in the captured area Russian-speaking and of Russian descent. The Safe Grain Corridor is in question as to its future next week but is still operational.
Weather models show a tropical storm is probable across the Florida/East Coast from September 28-October 1. Temperature forecasts are cooler in the E Midwest, but most frost threats stay absent. Still no sign of a harvest/delaying rainfall through the first week of October. Warmth returns in the 6-10 day forecast as US harvest beads ahead.
Cattle futures tumbled yesterday on the recessionary fears and hedging ahead of this afternoon’s COF report. December cattle closed under the 50-day moving average yesterday for the first time since July. This could create follow-through selling with the risk-off mentality encompassing the investment and commodity sectors. Cash trade did occur Thursday at $1 higher for the week in the southern plains at $143, while dressed trade continued in Nebraska, which sold $2-5 higher at $228. Box beef values remain under pressure, with choice down $0.73 and select falling $4.03. December live cattle have significant support the needs to hold a $148.00-148.50.
The NASS Cattle on Feed report is out today with On Feed numbers at 100% of year ago, placed at 98.1%, and Marketings at 105.9%.