Perspective: Morning Commentary for August 15

By: Arlan Suderman, Chief Commodities Economist

Mon, 15 Aug 2022, 13:29

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 15 – Wall Street is poised to start the week on the defensive, as traders wait for critical earnings reports from big corporate retailers, while also pondering troubling economic data from China. As such, both the commodity and equity sectors were under pressure overnight, with the VIX coming off of last week’s four-month lows to trade near 21. The dollar index rose notably overnight to trade near 106.1. Yields on 10-year Treasuries fell to 2.78%, while yields on 2-year Treasuries traded near 3.20%. Crude oil prices traded near six-month lows, trading more than 5% lower on the session. The grain and oilseed markets were down roughly 2% - 3% in overnight selling.

China’s central bank shocked observers today by cutting key lending rates to stimulate demand after key economic data fell short of expectations. China’s industrial output grew just 3.8% year-on-year in July, falling below analyst expectations of 4.6% growth, and falling below the 3.9% pace registered in June. Retail sales reversed from losses in May due to Covid lockdowns, registering year-on-year growth of 2.7% in July, but that fell from the 3.1% year-on-year growth seen in June, and it fell short of analyst expectations for 5.0% growth in July. The June boost in the numbers as Chinese cities reopened fizzled in July as the country continues to battle Covid with its zero-tolerance policies. The People’s Bank of China responded with monetary support, but it’s not getting the desired response from China’s economy. Property investments fell 12.3% in July, while new sales fell 28.9%. This is the second rate cut from the PBOC this year, but many Chinese investors seem reluctant to take advantage of the lower rates due to the uncertainties surrounding China’s economy. Furthermore, China risks a significant outflow of capital to higher-yielding overseas opportunities if it cuts rates too much, with much of the rest of the world in monetary tightening with rising rates. China’s monetary policy boosted M2 money supply by 12% year-on-year, but that has not had the desired impact on the economy.

New Covid-19 cases reached a new high in China Sunday, with 692 locally transmitted cases reported, with 582 of those in Hainan Province. There were 1,620 local asymptomatic cases identified as well, with 580 in Hainan and 523 and 343 respectively in tourist hotspots Tibet and Xinjiang. Summer tourism ends in two weeks, meaning people are returning home from these tourist spots to their local communities, making detection and management of Covid even more challenging in the weeks ahead. China is committed to its strict dynamic zero Covid policy until at least when its Congress meets this fall to re-elect President Xi Jinping to another four-year term. However, the policy has taken a significant toll on China’s economy, with you unemployment nearing 20%.

Five U.S. lawmakers visited Taiwan to show their support for the island nation today, as the Chinese military organized new multi-service joint combat readiness patrols and combat drills in sea and airspace surrounding Taiwan. The Chinese military also released close up video it had taken of Taiwan’s Penghu islands in the Taiwan Strait that are home to a major air base, attempting to intimidate leaders. The U.S. lawmakers arrived in Taiwan unannounced Sunday night to show their support for Taiwan, which China saw as another attack on its sovereignty. However, social media in Taiwan did not cover the lawmakers visit with Taiwan’s president, as it had done when U.S. House Speaker Pelosi visited earlier this month. The group left later in the day for an undisclosed destination. China is determined to “reunite” Taiwan to the Mainland, although it would prefer to avoid force in doing so, as it successfully did with Hong Kong. However, there are significant potential implications regarding U.S. trade if it does.

Friday’s USDA WASDE report really came in near expectations – at least what i expected. No, USDA did not cut corn acreage as much as I expected, and it cut soybean acres more than expected, but those were relatively minor factors. Changes to exports were largely anticipated as well. The agency slashed 8 million metric tons for Europe’s corn crop, which was a bit more aggressive than I expected in August, but more cuts are anticipated in future reports. It boosted Russian wheat production by 6.5 mmt, but there’s serious doubt Russia will be able to hit USDA’s export targets in the year ahead. The Algos quickly sold the report, but the human element slowly brought prices back to what I thought was a pretty good response in the end to the report. The grain and oilseeds sold off overnight in what was largely a China trade, with fund managers assuming that its struggling economy will result in lower demand for commodities. That’s truer for energy than for food-based commodities, but the funds paint with a broad brush. Fundamental news will largely be lacking this week, outside of export news. However, next week’s Pro Farmer Midwest Crop Tour should provide good insights into how crops are handling this year’s weather stresses.

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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

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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

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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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