Perspective: Morning Commentary for April 22

By: Arlan Suderman, Chief Commodities Economist

Fri, 22 Apr 2022, 13:35

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 22 – It was a tough day on Wall Street Thursday, as trade anxiety continued to ratchet higher the longer that Federal Reserve Chair Jerome Powell spoke. Stocks sank lower as Powell sounded increasingly hawkish in his comments, elevating fears once again on Wall Street that the Fed may overreact as it tries to tame inflation, dragging the economy down in the process. The VIX rallied well above 23 early this morning as fears continued to ratchet up following Powell’s comments. The dollar index posted a fresh two-year high near 101.1 this morning, while yields on 10-year Treasuries are trading near 2.93%. Crude oil prices are trading 1% lower, albeit well off their lows, while the Ags pushed higher in early-morning trade.

Indonesia will ban all exports of cooking oil and its raw material beginning April 28 to ease local shortages contributing to escalating food inflation. The export ban will extend indefinitely as the government monitors food prices. Indonesia is the world’s largest palm oil producer and exporter. The move highlights a recent trend of governments trying to head off social unrest as food prices rise on escalating global shortages. Today’s announcement captured the headlines, highlighting food inflation issues, which in turn seemed to spark buying in the broader commodity sector – particularly among the food-based commodities. We often see this story as merely a commodity story, but it reaches far beyond that as fund managers see the connection between tight global commodity supplies, food inflation, geopolitical risks, domestic and global economic activity and money flow. They’re increasingly all tied together until supplies ease. An increasing number of countries face social unrest as food prices rise, which tends to increase the hoarding mentality among governments to ease those pressures, but which in turn amplifies the shortage of supplies, while highlighting the problem for fund managers seeking a place to hedge their investment portfolios. All of this takes place as we approach the start of the Northern Hemisphere growing season.

The Climate Prediction Center made headlines Thursday when it forecast persistent drought in the Plains through much of the summer, spreading east toward the Mississippi River as the summer progressed. The most telling graphic was one it released showing its statistical certainty for areas that it expected to see normal to below normal rainfall. A broad area of the Plains stretching east across much of Iowa and Missouri has almost near certainty of below normal rainfall in June, July, and August, according to the Climate Prediction Center. A little perspective is important here. First, as I’ve said before, the models are being shaped by the concept of persistence. The longer the drought continues in the Plains, the more the models forecast them to persist and to spread east. That’s a very real risk. But a sudden unexpected rain event to break the drought in the Plains could still radically change the outlook for the better for the Midwest this summer. That hasn’t happened yet, and it might not happen.

I discussed this with Nutrien’s Eric Snodgrass on Thursday afternoon. He acknowledges the risks, especially with La Nina lingering in the equatorial Pacific, and cool waters lingering in the Gulf of Alaska and along the West Coast of the United States. However, he’s still not totally bought in to the Climate Prediction Center’s forecast for a hot dry Midwest summer, with the drought in the Intermountain West remaining so strong. If we see triple-digit highs in Arizona next month due to that dryness, it will increase risks that the summer high sets up further to the west, with the storm track riding up and over it, drawing down milder Canadian air into the Midwest, which could clash with Gulf moisture to provide favorable growing conditions. He acknowledges that this year’s drought risks are significantly elevated, but he’s not yet convinced that it’s going to happen, due to the above factors.

One thing that we do know is that the stakes are high. Prices are just below the record levels posted at the end of the disastrous 2012 growing season, reflecting current tight global supplies, and the growing season risks are still ahead of us. Give us a good growing season, and the highs may be behind us. On the other hand, the CPC’s outlook should have sent shivers down the spine of every end user needing to buy grain and oilseeds, as it suggests that significant upside price risks remain in place, should the drier forecast verify. Well-respected forecasters can be found on both ends of the spectrum for this summer’s growing season outlook. The full spectrum of possibilities remains in place, but the potential market implications are massive. Weather forecasts, and their proper interpretation, could perhaps mean more to the markets, and to geopolitical stability, this year than we’ve seen in many decades. Demand ratcheted higher today when USDA announced the sale of 28.9 million old-crop and 24.1 million new-crop corn bushels to China overnight, with Mexico making a big purchase as well.

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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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