Perspective: Morning Commentary for August 17

By: Arlan Suderman, Chief Commodities Economist

Wed, 17 Aug 2022, 13:23

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 17 – Stock futures came under pressure early today after Target’s earnings report disappointed, and ahead of this morning’s retail sales data. The VIX firmed above 20, but there’s still no sense of panic on Wall Street. The dollar index firmed to trade near 106.8. Yields on 10-year Treasuries traded near 2.87%, while yields on 2-year Treasuries traded near 3.34%, spending time at two-month highs this morning. Crude oil prices are mixed, as they consolidate near their lowest levels since January. The grain and oilseed sector found solid buying interest early this morning, following recent sharp losses.

Today’s retail sales data had a few surprises packed hidden behind the headline number, suggesting better economic activity than anticipated. The headline number suggested that retail sales were flat month-on-month in July, after being up 1.0% in June. Analysts expected 0.1% gains. Keep in mind that sales are a product of volume times price – they’re a combination of those two factors. Gas prices were tumbling in much of July, which would offset an increase in volume of that or other products. Retail sales minus vehicles rose 0.4% month-on-month, down from 1.0% gains in June, but well above the 0.1% decline anticipated by analysts. Retail sales minus vehicles and gas rose a healthy 0.7% month-on-month in July, matching the previous month, and more than double the 0.3% expected by analysts. That would have been a combination of an increase in both volume and price, but it was certainly better than expected, which garnered the attention of traders. Retail sales overall are up 10.3% year-on-year, with much of that being a product of inflation, but that still suggests some economic growth in output.

The bottom line is that today’s numbers still provide fodder for the hawks at the Federal Reserve desiring to maintain monetary tightening policy. Fed fund futures had been betting on a 50-basis point rate hike from the Federal Reserve at its September meeting, but that flipped to better than even odds of a 75-basis point hike in this mornings trading. It’s interesting to note that Fed fund futures have continued to reflect a more dovish expectation for rate hikes than the Fed’s own dot plot graphics released after its meetings. The market continues to expect the Fed to lose its courage and to moderate its tone before the next meeting, but then the Fed comes through with a more hawkish rate hike. There’s good reason for the market’s skepticism, given the Fed’s longer-term history, but the current Fed sentiment is very solidly committed to bringing down inflation. We’ve never done that in America without getting positive real interest rates – pushing rates above the rate of inflation. We’re still no where close to that yet. Pushing rates above the rate of inflation presents real challenges for the U.S. economy, while also dramatically increasing credit risks for developing countries holding dollar-denominated debt. But the Fed seems to believe that it must do so regardless. However, the question that still remains unanswered is, how much will next month’s increased pace of shrinking the balance sheet push rates higher? It probably won’t have much of an impact until excess cash sloshing around in the banking system is absorbed, but the impact should increase beyond that.

Power shortages are popping up in China due to the intense drought in the Yangtze River Valley curtailing hydro-electric power generation. Some soybean crushing plants saw operations closed, but not enough to significantly impact overall production. Corn and rice production is significantly impacted in the region. This isn’t in the heart of the corn producing region, but some estimates put losses as high as 8 million metric tons, although others are much lower. Rice is probably the crop most impacted as it goes through its reproductive phase. The Ministry of Agriculture allocated 300 million yuan ($44 million) in emergency aid for cloud seeding, short-season crop seed to replace damaged crops, and for adding fertilizer to strengthen the crop’s ability to withstand the heat (yes, you read that correctly). The official line in China is that the steps to mitigate losses are being effective, and that overall production has not been notably curtailed. This year’s anticipated Chinese corn crop was already expected to fall 24 mmt short of anticipated demand. Any additional shortfall simply increases the deficit that must be filled with imports and alternative crops.

The good news is that 560K metric tonnes of agricultural products left Ukraine ports on 21 ships in the first 15 days of August. The bad news is that just 560K tonnes left the ports. Most of that volume was corn. That’s not a strong enough pace to meet global demand with a short European crop, especially if the U.S. crop ends up being short as well, although that’s not yet determined. Grain and oilseed prices bounced this morning amid chatter of end user buying. The primary focus now is on next week’s industry crop tour for getting a look at this year’s crops in the field.

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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

Perspective: Morning Commentary for August 7

August 7 – The U.S. economy unexpectedly lost 23k jobs in July, dramatically below market expectations of an 80k increase and marking the worst Non-Farm Payrolls print since February. Furthermore, May and June were both revised sharply downward, with combined revisions showing 103k fewer jobs than previously reported. Outside of the healthcare sector, which added 22k jobs in July, the losses were very broad-based. Government payrolls saw the largest decline, shedding 53k jobs in July, the largest seen since October 2025, while June was revised down to show a loss of 10k jobs as well. The private sector at least saw growth, adding 30k jobs in July, now matching the month prior after it was revised down from the 49k initially reported, and substantially missing forecasts of 78k jobs being added. This is a sharp reversal in course from the largely better than expected U.S. labor data seen earlier this week.

Mike CastleFri, 07 Aug 2026, 13:26

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Morning Grain Comments 8-7

Morning Grain Market Comments - Matt Zeller

Matt ZellerFri, 07 Aug 2026, 11:56

Grains & Oilseeds

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