Perspective: Morning Commentary for April 13

By: Arlan Suderman, Chief Commodities Economist

Wed, 13 Apr 2022, 13:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 13 – It’s the same song; different verse today. Inflation is again the focus, after yesterday’s data showed a rise in the headline inflation level at the consumer level to a fresh 40-year high. Today’s data will give us a glimpse at March inflation at the producer level, which should say something about future consumer inflation pressures. Stocks were mixed overnight, ahead of the data release, with the growth stocks showing the greatest concern. Today’s data confirmed strong inflation at the producer level as expected, with the markets again responding. The VIX is trading near 24 this morning, reflecting elevated anxiety levels among Wall Street traders. The dollar index is trading near 100.5, after posting fresh 22-month highs this morning. Yields on 10-year Treasuries are trading near 2.69%, which is below yesterday’s three-year high near 2.84%. Crude oil prices are trading more than 1% higher in early trade, while the Ags pulled back modestly in profit taking early this morning.

The producer price index surged 1.4% month-on-month in March, up from 0.8% growth in February and exceeding analyst expectations of 1.1%. The PPI was up a record 11.2% year-on-year in March, but that’s because the PPI has only been around a dozen years. Today’s number was up from 10.0% in February, and it exceeded analyst expectations of 10.6%. The core PPI that excludes the more volatile food and energy sectors rose 1.0% month-on-month, up from 0.7% the previous month, and exceeding analyst expectations of 0.5%. The core PPI rose 9.2% year-on-year in March, up from 8.4% in February, and exceeding analyst expectations that it would remain at 8.4%. Energy prices rose 5.7% month-on-month in March – no surprise there. But food prices rose 2.4% month-on-month in March, and transportation and warehousing rose 5.5% month-on-month. Those are hot items that continue to increase costs for consumers. For example, jet fuel prices increased 23% in March, which in turn translated into a sharp rise into airfare costs paid by consumers traveling by air. The bright spots in today’s data included an 8.6% decline in natural gas prices, while we also saw notable declines in the prices for cold rolled steel and for beef.

We heard a lot about “peak inflation” yesterday, as Wall Street focused on several numbers that showed improvement in the consumer price data. But today’s PPI data would argue that we have not yet seen the top of the inflation curve, which again puts the focus on the next Fed meeting on May 3^rd & 4^th. Fed fund futures trading this morning put 87% odds of a 50-basis point rate hike on May 4^th, with that followed by additional increases of 50-basis points in June, and again in July. Fed fund futures currently anticipates this year’s total rate hikes to add up to 250 basis points. But that may not be the primary thing that the market focuses on in the months ahead. Rather, the market’s focus now likely shifts to the Fed’s plan for shrinking the balance sheet, which is the Fed’s way of withdrawing the trillions of monetary stimulus that is currently in the economy. That process is expected to begin over the next 60 days, with the details expected to be announced by the Fed on May 4^th.

Hot inflation is a product of several factors. Trillions of dollars of stimulus injected into the economy artificially elevated demand for goods over the past two years. That demand exceeded the capacity of supply chains under normal conditions, but the problem was exasperated by lingering issues related to the pandemic. Inflation was already at nearly 40-year highs when the Russian invasion of Ukraine took that initial problem to another level. That problem is now being aggravated by China’s Covid-related lockdowns that add even more delays to supply chain problems. Within all of this is an environment of regulations that add to costs, as well as widespread shortages of labor. In fact, labor shortages are one of the reasons why shale oil companies struggle to sufficiently increase production currently, in addition to an unfriendly regulatory environment. We all hope that we are approaching “peak inflation,” but thus far those ideas are built more on hope than they are on fact, in my opinion.

Tuesday’s inflation data confirmed that the food and energy commodities are the focus for fund managers wanting to hedge their portfolios against the eroding effects of inflation. Those sectors have a fundamental story, which also makes them attractive as a hedge against inflation. That doesn’t mean that prices will go up every day, nor does it say that individual assets within these sectors won’t see times of significant selloffs. Yet, these sectors remain attractive overall. Global supplies of corn and wheat combined as a percentage of annual usage have been trending lower for the past 50 years. Demand has been rising faster than supply growth, with a few periods of exceptions. Stocks were drawing down prior to the Ukraine war, but that war further amplified the problem. Now the focus is on weather for safrinha corn pollination in Brazil, planting in the Midwest, and for drought-stricken areas of the Plains winter wheat belt. None of these situations suggest imminent disaster, but all of them warrant extra attention this year with Ukraine largely out of the global export market. The margin for error is virtually non-existent this year. We need good crops all the way around, and that may not be enough, unless we see demand curtailed significantly below current expectations.

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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: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

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

Perspective: Mid-Day Commentary for August 7

August 7 – Stocks are looking to end a strong week on a strong note, with the major indexes all in the green at the time of writing. The VIX touched a nearly seven-month low earlier in the session and remains muted as it hovers just below the 15-mark as this morning’s ugly labor market data helps ease hawkish Fed jitters. The dollar has rebounded from its nearly two-month low earlier in the session but remains in the red on the day, trading at 99.55 at the time of writing. Treasuries have had a very volatile day, with yields tanking following this morning’s Non-Farm Payrolls release but bouncing back into midday, with 30-year yields now trading at 5.209%, 10-year yields trading at 4.654%, and 2-year yields trading at 4.204%. Crude oil has risen from the morning lows as traders eye the weekend market closure for potential geopolitical developments, with nearby WTI now down only 0.2% on the day to trade around $78.10 and nearby Brent breaking into the green, up 1.25% on the day to trade above $83.50. The ags are largely mixed, with the grains and oilseeds mostly in the green, save for a mixed picture in the soy complex, while live and feeder cattle futures move in opposite directions, with the former adding to yesterday’s sharp losses and the latter attempting a rebound.

Mike CastleFri, 07 Aug 2026, 17:09

Grains & Oilseeds

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