Perspective: Morning Commentary for April 1

By: Arlan Suderman, Chief Commodities Economist

Fri, 01 Apr 2022, 13:25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 1 – Stocks pushed modestly higher overnight, although they pulled back from those gains with this morning’s monthly jobs report. The VIX is trading near 20, while the dollar index firmed to trade near 98.5. Yields on 10-year Treasuries are near 2.43%, with an added boost from the jobs report, on ideas that inflation risks remain very real, and that we are likely to see a response from the Fed next month. Crude oil prices are back below $100 per barrel this morning, reacting to President Biden’s plants to empty a large portion of our Strategic Petroleum Reserve between now and the mid-term elections. The Ags are mixed, with wheat prices showing solid gains overnight, while soybeans remained weak following yesterday’s bearish acreage surprise from USDA. There’s a lot of data for traders to digest as we close out the week, while starting a new month, but the emphasis is slowing shifting back to the war in Ukraine.

The economy created 431K jobs in March, down modestly from analyst expectations of 490K, but a good number, nonetheless. The February numbers were revised to 750K jobs created, up from the 678K originally reported. The combined numbers suggest that employers still have enough confidence in the economy to remain aggressive in the employment sector, with hourly wages rising 0.4% month-on-month in March, and 5.6% year-on-year. That annualized wage inflation number came in a bit hotter than the 5.5% expected by analysts, and it was certainly hotter than the 5.2% reported in February. The labor participation rate also ticked higher to 62.4% in March, although the average workweek slipped a tick lower to 34.6 hours. Wall Street interprets the above numbers as suggesting that a) the economy remains resilient, and b) wage inflation will continue to argue for stronger efforts by the Federal Reserve to tame inflation. As such, Fed fund futures trading this morning is pricing in 76% odds that the Fed raises its benchmark interest rate by 50 basis points in early May, with 72% odds that we will see another 225 basis points between now and the December meeting. In fact, trading gives 31% odds that we could see the benchmark rate at 275 – 300 basis points by the December meeting.

Europe is calling Russia’s bluff. Russia is seeking to drive a wedge between Europe and the United States by saying that it will require payment for natural gas sent to European countries in Rubles, along with others, who are “unfriendly” to it in the war with Ukraine. The new payment requirement is to start today going forward. Otherwise, Russia said that it would turn off the gas supply, which accounts roughly 40% of Europe’s natural gas needs. Italy appears to be caving to the Russian demand, but much of the rest of Europe is calling Putin’s bluff, by all appearances. They understand that revenue from Russia’s energy sales are keeping the Russian economy afloat. It can ill-afford to shut off its own revenue source. They’re not willing to shut it off, due to their dependency on it, but neither do they think that President Putin has the fortitude to do so. As such, most European leaders are publicly saying that they have no intentions to move away from the contract terms that do not require payment in Rubles. Shutting off the gas supply would do tremendous harm to Russia’s economy, while also speeding up the shift in European dependency toward other sources of energy, which would have long-term negative consequences for Russia as well. Russia’s economy is already expected to contract by as much as 10% this year, with rapidly rising unemployment, and with inflation currently averaging near 7%. Meanwhile, there is evidence today that Russia has regrouped for another attack on Ukraine’s capital city of Kyiv.

The lockdown continues in Shanghai, with more than 36,000 cases of Covid-19 identified thus far in the current outbreak. Authorities are only locking down communities where Covid has been identified, but that’s most of the city of nearly 28 million people. Citizens are mandated to stay home. They are not to leave their homes, even to take out the trash or to walk their dogs. Public transportation is suspended with all non-essential services shut down. Designated areas are set up for everyone needing to be quarantined. Reports of food shortages are common, along with the inability to get access to hospitals. Public unrest is growing.

USDA changed the dynamics of the grain and oilseed markets on Thursday. Suddenly, the markets are waking up to the reality that the world may be tight on corn this year, with Ukraine absent from the export market, and U.S. farmers reducing planting intentions more than expected due to high crop input prices. Furthermore, the weather models have shifted sharply drier for safrinha corn areas of Mato Grosso and areas to the east as the crop heads into pollination amid signs that the rainy season may be ending several weeks early at a critical time for the crop. Meanwhile, higher soybean acreage eased, but didn’t eliminate, concerns of shortage of the oilseed. Historically, there’s a tendency in years with normal planting weather to see corn acreage drift higher and soybean acreage drift lower as we move through the planting season, which could impact 500K to a million acres. That would bring final acreage closer to our expectations going into this report, with overall supplies of the major food and energy commodities remaining tight. For now, the market is seeking to influence that shift by buying December corn while selling November soybeans. The trade was also surprised by the decline in spring wheat acreage, although we were not, and it is trying to incentivize a shift there as well.

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Perspective: Morning Commentary for August 12

August 12 – Today’s focus is on inflation, with the July consumer price index data out this morning. We have this, and one more month of data, ahead of the next Federal Reserve meeting. Of course, headlines from the Middle East and the Black Sea wars also have an ongoing influence on the markets. Stock futures posted gains this morning, while the VIX traded just below 15. The dollar index traded near 99.7. Yields on 10-year Treasuries are trading near 4.66%, while yields on 2-year Treasuries are trading near 4.18%. WTI crude oil is trading near $83, while Brent trades near $88 per barrel. The grain and oilseed markets rebounded from yesterday’s losses ahead of today’s highly anticipated WASDE crop report that is due out at Noon Eastern Time.

Arlan SudermanWed, 12 Aug 2026, 13:33

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

Perspective: Morning Commentary for August 11

August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.

Arlan SudermanTue, 11 Aug 2026, 13:21

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

Perspective: Mid-Day Commentary for August 10

August 10 - Stocks traded quietly mixed to weaker through much of the morning as investors weigh Middle East war / peace headlines with artificial intelligence concerns / opportunities. Ironically, the VIX is trading near 15, putting it just barely above 2026 lows, despite the high level of geopolitical risks and AI concerns. The dollar index continues to consolidate largely between 99.5 and 100.0 after the late July break in what appeared to be Japanese central bank currency intervention. Yields on 10-year Treasuries are trading near 4.70%, while yields on 2-year Treasuries are trading near 4.24%. WTI crude oil is trading near $81 at this hour, while Brent trades near $87 per barrel on the geopolitical risks. The grain and oilseed markets are mixed ahead of Wednesday's big USDA WASDE crop report.

Arlan SudermanMon, 10 Aug 2026, 17:02

Grains & Oilseeds

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