The Top OpenMarkets Stories of 2022

Articles From: CME Group
Website: CME Group

By:

Director of Corporate Marketing and Communications, CME Group

AT A GLANCE

  • From rising rates to crypto, OpenMarkets viewers were drawn to some of the year’s defining market trends
  • Oil and agriculture represented the three most viewed stories in 2022

Volatility defined financial and commodity markets in 2022. From a bear market in equities to supply constraints in grain markets, market participants watched and planned as several historic trends developed. Our look back on the most-viewed OpenMarkets stories of the year includes some of these major economic stories (rising rates, crypto) and some less followed trends (pork demand).

Each of these topics continues to develop, and bears watching in the year ahead. Following are the top pieces, in order of most viewed.

1. SEASONALITY IN HOGS VS. PORK: MORE THAN JUST GRILLING SEASON

In September, Emily Balsamo and Anne Krema analyzed the seasonal differences in supply and demand for live hogs and pork. This topic is naturally one of interest to livestock producers. However, the story appealed broadly to OpenMarkets readers who understand the demand for grilling meat in the summer and making sure it has a place at the holiday dinner table.  The authors highlighted the dynamic of high demand in the summer months, and higher supply of lean hogs in November and December, which in part determines what consumers pay at the grocery store.

The authors write:

“As a result of seasonal trends in farrowing, there is an abundant supply of lean hogs in the market in November and December relative to the rest of the year. This tends to drive the price down. At the same time, there are various factors that can lend strength to pork cutout prices, such as holiday demand for hams, which can ultimately lead to a higher cutout price relative to hogs.”

2. WHAT A HISTORIC RELEASE AND REFILL OF THE STRATEGIC PETROLEUM RESERVE MEANS FOR MARKETS

Also in September, Bob Iaccino highlighted the historic release – in size and speed – of 180 million barrels of crude oil from the U.S. strategic petroleum reserve. Oil and gasoline prices were among the year’s most closely watched stories, with gas prices reaching multi-year highs several times throughout the year. Iaccino focused on the history of the SPR, its intentions and how it has been used in practice in the years since its development in 1974. Critical, he argues, will be the historic refilling of the reserve following such a large drawdown.  

“There are many other concerns with the entire operations of such a large and rapid release, but make no mistake, it was indeed ‘historic.’ The refilling of the SPR may also be.”

3. HIGH PROTEIN, HIGHER PROFILE: WHY CANADIAN WHEAT MATTERS FOR GLOBAL MARKETS

Back in April, wheat seized the attention of consumers and grain market participants alike following Russia’s invasion of Ukraine. Global supply and demand were suddenly in question with two of the world’s major producers at war. Though unrelated to the war, readers found interest in the topic of Canadian wheat and its importance to the global market. Canada has historically represented about 6% of global wheat supply. Emily Balsamo wrote about the launch of Canadian Western Red Spring Wheat (Platts) futures, which represent a tool for farmers, merchandisers, importers and exporters to hedge their exposure to Canadian Western Red Spring wheat markets. Balsamo wrote of the volatility in the market at the time:

“The year 2022 has been a volatile one for wheat so far. The war in Ukraine and adverse North American weather conditions have resulted in substantial upward price movements in both domestic and international wheat markets… Meanwhile, exogenous inflationary pressures add yet another layer of uncertainty, further contributing to the industry’s need for a way to manage regionally-specific risk.”

4. HOW RISING RATES COULD INFLUENCE TECH EARNINGS

Battered tech stocks were a big theme across equity markets in 2022. The trend began early in the year at the same time that the Federal Reserve began raising its benchmark rate. In all, the Fed raised rates seven times in 2022, but were the rate increases responsible for declining tech stocks? That’s what Scott Bauer looked into in this article from April, providing a historical backdrop for how the Nasdaq 100 has performed during rising rate cycles. This year proved to be fairly consistent with history, with the Nasdaq dropping more than 30% through mid-December. However, Bauer pointed out in April a longer-term outlook is necessary to gauge the true relationship of rates to tech stocks.

“During times of uncertainty, investors turn towards more steady companies, just as they generally look to the fixed income markets to invest in safer assets. Investors may run for greener pastures in the short term. However, there is no real data to show that that decision is warranted given equities’ performance during past rate hike cycles.”

THE CRYPTO COASTER: WHAT’S SENDING BITCOIN ON A WILD RIDE?

By late December, bitcoin had lost 60% of its value from the start of 2022. The crypto industry lost more than $1.4 trillion in total value on the year. The crypto bear market was already underway when Scott Bauer wrote about the factors driving bitcoin’s decline in April. These factors included, as they do today, Fed rate policy, the possibility of crypto regulation and an emerging crypto alignment with equities that also were in decline. In Bauer’s view, Fed policy was the top force in keeping bitcoin prices down in April. As we know now, new factors emerged in November with the collapse of FTX that likely contributed to the bitcoin’s further decline.

Originally Posted December 28, 2022 – The Top OpenMarkets Stories of 2022

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