If there’s one thing market analysts have learned over the years it’s that market perception often is stronger than market reality.
Often, those two go hand in hand, but just when it seems market realities are lining up, market perceptions take over, extending a market move or taking prices in a direction that defies logic. Such might be the case now.
CONSUMER SENTIMENT DROPPING
The University of Michigan’s domestic US Consumer Sentiment index last week showed monthly consumer sentiment at levels that drop below the low of May 1980. The 2022 Index low was in June at 50.0, while the May 1980 low was 51.7.
Since June, the index rose to 59.9 in October but fell back to 54.7 in November.
But wait! There’s more. The monthly North American Consumer Confidence indices from the Organisation for Economic Co-operation and Development and reported by the Livestock Marketing Information Center, showed US Confidence running well below that of Canada or Mexico.
Graphed together with the monthly, long-term average equaling 100, the US index in October was 96.79916, compared with the September Canadian index at 100.8351 and the June Canadian index of 97.83.
It’s interesting to some that China’s monthly consumer confidence index from the OECD dropped sharply this year, falling to a reading of 94.35867 on a graph using the monthly long-term average equaling 100 from 102.8656 in December 2021. While consumer confidence in Japan and South Korea also is in decline, China’s drop brought the whole Major Five Asia line down with it.
US CONSUMER PRICE INDEX REMAINS HIGH
Possibly contributing to the decline in US consumer confidence is the fact that prices of many items are up sharply this year, a market analyst said. There simply has been no relief.
October’s Consumer Price Index from the Bureau of Labor Statistics and reported by the LMIC showed October’s CPI at 298.012, compared with October 2021’s 276.589 and the previous five-year average of 251.8022.
A graph line of the US CPI showed it to be well above last year and the 2016-2020 average all year, and it shows little sign of turning lower to intersect last year or the previous five-year average by the end of the year.
Almost leading the way has been the CPI for food and beverages, rising all year and expanding the distance between last year’s and the 2016-2020 average every month with no setbacks.
Included in the food index is the CPI for meats, which has remained higher than either last year or the previous five-year average all year. Last year’s index moved higher through November before dropping in December. This year, the index didn’t rise as fast, closing in on last year but showing little inclination to intersect.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers last week ranged from $150.11 to $153.77 per cwt, compared with the previous week’s range of $150.00 to $154.40. FOB dressed steers, and heifers went for $234.01 to $242.86 per cwt, versus $233.15 to $242.13.
The USDA choice cutout Friday was down $4.33 per cwt at $258.94 while select was off $1.56 at $235.27. The choice/select spread narrowed to $23.68 from $26.44 with 59 loads of fabricated product and 17 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $2.15 to $2.25 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.58, up 4 3/4.
The CME Feeder Cattle Index for the seven days ended Thursday was $175.46 per cwt down $0.05. This compares with Friday’s Nov contract settlement of $176.95, down $1.67.