Perspective: Morning Commentary for December 20

By: Arlan Suderman, Chief Commodities Economist

Mon, 20 Dec 2021, 14:20

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 20 – Friday’s equity sell-off resumed overnight, although stocks are generally well off their lows this morning. The selling is again largely related to Omicron fears as restrictions increase in countries most impacted by the new Covid variant, creating somewhat of a “risk-off” environment overnight. The VIX is trading near 26 this morning, after spiking to a two-week high above 27 earlier in the session. The dollar index is trading near 96.4, while yields on 10-year Treasuries are trading near 1.40%, after probing two-week lows near 1.35% earlier this morning. Crude oil prices are roughly 4% lower on fears that Omicron restrictions will slash global demand, while the Ags are mixed to lower as well, although not as significantly. This is a holiday-shortened week, with the markets closed on Friday for the Christmas break, adding to this week’s abnormal trading patterns.

Omicron infections are rapidly multiplying around the world, with reports of the new variant now coming from at least 89 countries, after it was just identified last month. Infection numbers are doubling every two to three days in many areas, putting pressure on politicians to “do something.” That tends to lead to more restrictions. The Netherlands implemented a fourth lockdown yesterday, leaving just essential businesses open, while stating that no more than two people can be together outdoors, unless they have the same home address. Great Britain’s cabinet is meeting today to discuss steps to slow the spread of Omicron, where the death toll reached 12 from the new variant. Israel added the United States to its “no fly” list due to concerns over the spread of the Omicron variant, adding to the growing list of travel restrictions around the world that are curtailing energy consumption.

Positive Covid-19 cases continue to trend higher in the United States, which is now a blend of predominantly Delta and Omicron variants, but with the latter rapidly moving towards dominance. The seven-day moving average for positive tests rose to nearly 126K on Friday, the latest date for which data was available this morning, which is a three-month high. The seven-day moving average peaked above 164K on September 1^st, before dipping to 64K in late October, and then trending higher again as cold weather returned. The all-time high for the seven-day moving average peaked above 250K in mid-January of this year. That’s when the seven-day moving average for Covid-related deaths peaked at 3,421 per day. This indicator fell to just over 200 Covid-related deaths in July, before rising again to 1,921 on September 15^th as the adverse impact of Delta peaked. The seven-day average for Covid-related deaths sat at 1,182 on Friday. It’s slowly trending higher, but not yet at the speed that we’ve seen in other outbreaks. Hopefully, it won’t.

Deaths have occurred among patients with Omicron, but thus far it has been known for having predominantly mild symptoms. The typical path for a virus is to mutate toward a faster spreading, but less lethal type. That thus far appears to be the path that we are on with Omicron. Far more will be known about the long-term impacts of the various variants five to 10 years from now, as it remains a relatively new virus for the world. But from an economic standpoint, which is my responsibility, its adverse impact diminishes as mutations become less lethal. I wrote in this column in early February 2020 that the original variant of Covid-19’s greatest threat to the economy was the fear that it creates. It’s fear that changes human behavior and that leads politicians and health officials to create lockdowns and restrictions, which then negatively impact the economy. That fear still exists. It hasn’t gone away yet, but it is decreasing in its intensity. There will be more variants, and if it follows the typical path, they will become less and less lethal, resulting in lower and lower fear, which means fewer and fewer restrictions. As such, market impacts will be less in scope as this occurs. That is the path that we are currently on.

La Nina is finally making its impact known in southern Brazil and in Argentina. Warm dry conditions are adversely impacting roughly one-third of Brazil’s grain belt currently. Crop stress currently impacts roughly 10% of Argentina’s crops, with 86% and 87% of that country’s corn and soybean crops rated Good to Excellent currently following recent timely showers. Yet, the area under stress is expected to expand to at least 40% of the belt over the next two weeks in Argentina. Brazil’s summer corn crop accounts for just a quarter of its total production, but it is being impacted more significantly. Brazil’s soybean crop is more heavily focused on northern crop areas where yields are expected to be quite good, although they’ll need to offset losses in the southern part of the country. Near-term, watch the VIX – Wall Street’s fear index. It has the potential to drive money to the sideline. We can also see erratic movement as fund managers square their positions to show end-of-the-year profits in the commodities.

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Perspective: Morning Commentary for August 6

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Mike CastleThu, 06 Aug 2026, 13:24

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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