Perspective: Morning Commentary for April 12

By: Arlan Suderman, Chief Commodities Economist

Tue, 12 Apr 2022, 13:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 12 – Inflation is front and center on Wall Street today. Stocks traded quietly higher ahead of this morning’s inflation data, while money flowed into the broader commodity sector after the White House warned late Monday that this morning’s number might be high. Money continued to flow into the commodities following the inflation data’s release, while the equities rally gained a bit more momentum on hopes and expectations that the Federal Reserve will tame inflation beginning next month. The VIX rose to a fresh three-week high above 25 overnight, while the dollar index reached a fresh 22-month high above 100.0. Yields on 10-year Treasuries are trading near 2.72%, after rising to a fresh three-year high near 2.84% overnight. Crude oil prices are trading 4% higher, while the Ags are mostly higher as well, boosted by a combination of inflation money flow, as well as fundamental support.

The consumer price index headline number came in a bit hotter than expected at a fresh 40-year high. The CPI for March jumped 1.2% month-on-month in March, up from an increase of 0.8% in February and above analyst expectations of 1.1%. In other words, inflation was a problem prior to the Russian invasion of Ukraine, but that event escalated inflationary pressures in March. The CPI rose at a 40-year high pace of 8.5% in March, up from 7.9% in February and above analyst expectations of 8.4%. The sectors leading inflation higher were gasoline, food, and shelter, which are all necessities of living for consumers. Yet, the Fed tends to focus on the core inflation data that excludes the food and energy sectors. The core CPI rose 0.3% in March, down from 0.5% growth in February and down from analyst expectations of 0.5%. The core CPI rose 6.5% in March, up from 6.4% the previous month and below analyst expectations of 6.6% year-on-year inflation.

Gasoline prices rose 25% on the month in March as most consumers know, and it was up 48% year-on-year. Total energy was up 11% month-on-month and up 32% year-on-year. Food purchased for consumption at home was up 1.5% month-on-month and up 10% year-on-year, while food purchased for consumption away from home was up 0.3% month-on-month and up 6.9% year-on-year. Shelter prices rose 0.5% month-on-month and they are up 5.0% year-on-year. New vehicle prices are up 12% year-on-year and used vehicles are up 35% year-on-year, but there was some good news here. New car prices were “only” up 0.2% month-on-month in March while used care prices fell 3.8% month-on-month in March. Car prices seem to be peaking. Commodities other than food and energy fell 0.4% month-on-month in March, although they are still up 11.7% year-on-year. It’s generally the food and energy commodities that are seeing the strong gains. Those sectors had solid fundamentals prior to the Ukraine war, with demand rising faster than production, but the war amplified those problems, creating even more escalation of prices. We should see inflation data from the producer level tomorrow, at which time the focus will again be on the anticipated response from the Federal Reserve in three weeks.

This brings us back to Ukraine, and its anticipated impact on commodity supplies over the coming year as the war rages on there. As you know, I remain pessimistic that Ukraine will be able to be a significant exporter in the year ahead, but I also want to be transparent that the view coming out of Ukraine is more optimistic. The Ukrainian Grain Association expects Ukraine to produce 18.2 million metric tons of wheat this year, down from 33 mmt last year. Domestic consumption is near 6 mmt, so that would leave roughly 12 mmt available for export, with close to 10 mmt carried over from the previous year’s crop that have not yet been exported. That would seem to say that Ukraine could export 22 mmt, although the UGA puts 2022-23 wheat exports at 10 mmt. Corn production is expected to reach 23.1 mmt, down from 37.6 mmt the previous year, with exports at 20 mmt. Sunflower seed production is expected to reach 9.8 mmt, down from 16.9 mmt the previous year. The UGA projects total 2022-23 grain exports at 35 mmt, although that will necessitate the reopening of ports at the necessary capacity. Exports to the west via land routes have a capacity of 600 kmt per month. They need to be able to expand that capacity to 3 mmt per month to reach the anticipated target. That’s a very optimistic outlook in the current environment.

The Biden Administration will reportedly support an emergency waiver to allow the sale of E-15 gasoline this summer, although that will likely have very little impact on ethanol use until/unless the move is made permanent. Meanwhile, the market remains skeptical of Ukrainian exports, with traders starting to take note of the cool wet spring seen across central and eastern areas of the Midwest that is slowing fieldwork, while drought continues to rage in the Plains. Snowfall totals of 1 – 2 feet will provide some drought relief in North Dakota, but the drought continues further south. Winter wheat condition ratings firmed slightly but remain the second lowest on record for the date. Good to Excellent ratings rose by 2 points in the wheat state of Kansas to 34%, but the percent rated Poor to Very Poor also rose by 2 percentage points to 32%. As for China, there are early indicators that Covid numbers “may” be peaking, raising hopes that demand may soon be recovering in the world’s largest importer of commodities.

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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Perspective: Morning Commentary for August 3

August 3 – Equities futures are pointing higher to open the week and month, still in range of recent record highs and flush with optimism that the U.S. and others will start to negotiate with Iran over the Strait of Hormuz. A busy week is on tap with earnings reports and jobs data, among other economic releases. Crude oil is down over $5 per barrel and nearing in on three-week lows. The dollar is only slightly lower this morning but at its own month-and-a half low, while the U.S. ten-year note is also slightly on the low side at 4.68. The VIX index is rebounding a bit today after a sharp slide into the end of last week, just above 16.

Matt ZellerMon, 03 Aug 2026, 12:45

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Perspective: Mid-Day Commentary for July 31

July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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