Perspective: Mid-Day Commentary for May 2

By: Arlan Suderman, Chief Commodities Economist

Thu, 02 May 2024, 15:35

Perspective: Mid-Day Commentary

Arlan Suderman

Chief Commodities Economist

May 2 - Stocks added to modest overnight gains this morning as Treasury yields worked lower following yesterday's Fed statement. The VIX slipped below 15, while the dollar index is trading near 105.7. Yields on 10-year Treasuries are trading near 4.61%, while yields on 2-year Treasuries are trading near 4.92%, as the inverse between the two continues to narrow. Crude oil prices are modestly lower at fresh seven-week lows, while the grain and oilseed markets are mostly higher. Strength in soymeal demand supported double-digit gains in soybeans this morning, while corn added to chart-related positive money flow as well. Wheat prices are mixed, with the hard wheat markets adding a bit more weather premium, while Chicago soft red winter wheat comes under modest pressure. The cattle market is hot this morning following a USDA announcement that it found no bird flu virus in ground beef that it tested.

Exporters sold just 29.9 million bushels of current-year corn in the week ending April 25, along with 15.2 million bushels of current-year soybeans and 0.3 million bushels of this year's grain sorghum. Old-crop wheat sales were a negative 0.7 million bushels, while new-crop sales totaled 15 million bushels. Soybean sales are not good when Egypt is your top buyer during the week at 5.4 million bushels. Marketing year to date corn export sales exceed the seasonal pace needed to hit USDA's target by nine million bushels, while soybean sales fall short of the seasonal pace by 66 million bushels.

StoneX Brazil's May customer survey pegs the soybean crop at 150.8 mmt, which is essentially unchanged from the previous month. However, the survey pushed its winter (safrinha) corn production estimate up to 97.3 mmt, up from 96.1 mmt the previous month on a net increase in yield. A jump in Mato Grosso's yield more than offset lower yield estimates for Mato Grosso do Sul and Parana. This puts total corn production at 125.6 mmt, up from 124.2 mmt the previous month.

My morning comments focused primarily on yesterday's Fed's statements, but I don't want to overlook some of the other notable economic data that came out this morning, ahead of tomorrow's big monthly jobs report. First, the Challenger job-cut report indicated that corporate layoff announcements in April totaled 64,789, down from 90,309 the previous month. These are required announcements of possible layoffs, but the actual number can fall below that level. Next, first-time claims for unemployment benefits remained unchanged at a low 208K in the week ending April 27, falling below analyst estimates of 211K. That dropped the four-week moving average to 210K claims, down from 213.5K the previous week. Continuing claims for the week ending April 20 were unchanged at a low 1.774 million, with the four-week moving average dropping to 1.789 million. These numbers continue to reflect a tight jobs market. Finally, non-farm productivity fell to an annualized growth rate of 0.3% in the first quarter of this year, down from 3.2% in the previous quarter, and below analyst expectations of 0.9% growth. Lower productivity means that labor costs to get the same job done go up. Unit labor costs grew at a 4.7% annualized pace in the first quarter, up dramatically from 0.4% in the previous quarter, and beating analyst expectations of 3.3% growth. That translates into greater upward wage inflation pressures caused by the drop in productivity. Factory orders grew 1.6% in March, matching expectations, but up from 1.2% growth in February. The graphic below shows today's interest rates, relative to the past 50 years for a little bit of perspective.

image-20240502103645-1

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Mike CastleFri, 31 Jul 2026, 16:33

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