Perspective: Morning Commentary for January 17

By: Arlan Suderman, Chief Commodities Economist

Tue, 17 Jan 2023, 14:39

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

January 17 – Stocks came under modest pressure this morning as Goldman Sachs missed profit expectations in its earnings report for the fourth quarter of 2022. Yet, the VIX is still trading below 20 this morning, reflecting relative contentment on Wall Street. The dollar index is trading near 102.0 in early trading. Yields on 10-year Treasuries are trading near 3.54% as they rally this morning, while yields on 2-year Treasuries are trading near 4.22%. Crude oil prices are 1% higher, while grain and oilseed prices traded mostly lower overnight. Wall Street is bracing for more inflation data tomorrow morning – this time the producer price index focused on rising prices at the wholesale level.

The Empire State manufacturing index fell to -32.9 this month, down from -11.2 last month and below analyst expectations of -8.1. A number below zero reflects contraction from the previous month, so this morning’s number reflects a sharp contraction indeed. Both new orders and shipments fell substantially this month, although delivery times held steady, and inventories edged higher. Growth in employment stalled this month, while the average workweek got a bit shorter. Moderation was seen in both input price increases, as well as selling price growth. Perhaps more significantly, surveyed firms see little improvement in business conditions over the next six months. That lack of optimism regarding the future tends to make firms reluctant to hire or to invest in future growth.

China’s gross domestic product rose 3% in 2022, which fell far below the government’s 5.5% target for the year as Covid restrictions clamped down on economic activity. However, the number came in better than the 2.8% expected by analysts due to a resurgence late in the year as China opened up following three years of those restrictions. That resulted in increased economic activity, even as people wrestled with the ensuing Covid outbreak. The current expectation is that China will emerge with a significant rebound in its economy in 2023, although there will be rough patches early as it continues to battle waves of Covid. Nonetheless, the expectation is that a sharp economic rebound will be one of the big stories of 2023, with significant implications for the global economy, as well as for its demand for commodities.

But China has a longer-term problem. Its population is aging and shrinking, and that’s not sustainable from the standpoint of maintaining strong economic growth. China’s population fell by 850K people in 2022 – its first decline in six decades. China’s population growth has been slowing since 2016, and it went into contraction in 2022, with that trend expected to continue in the years to come. China’s population is currently said to be 1.412 billion people, which means that India will likely top it this year as the world’s most populous nation. China’s population demographics are inverted, with a larger population of aging people than of young people. That means fewer workers to provide for the elderly, and to sustain the economy. China’s survival as a superpower means that it has to expand its resources – therefore its focus on its Belt and Road program. This program puts human and capital resources at many locations around the world that send revenues back to China. It may also partially be responsible for President Xi Jinping’s more aggressive stance toward Hong Kong and Taiwan in recent years, as well as his increased involvement in other world affairs. A strong military is dependent on a strong economy, and sustaining a strong economy is difficult if your population is aging.

The Brazil soybean harvest remains in its very early stages of single-digit progress, although all indications are that it is a big crop. Most of the private production estimates put the crop somewhere near 153 million metric tons, which is up nearly 26 mmt, or nearly a billion bushels, from last year’s crop. Much of the focus of late has been on the drought in Argentina, and that continues to be a significant problem. The Rosario Grain Exchange currently pegs Argentina’s soybean crop at 37 mmt, down from USDA’s current estimate at 45.5 mmt. Using the lower estimate still puts South American soybean production at nearly 24 mmt higher than the previous year’s output. Yes, it means that soybeans need to flow south from Paraguay and Brazil on the Parana River to crushing plants in Argentina to keep crushers operating, but that can happen. I don’t want to minimize the severity of the drought in Argentina, but it’s also important to recognize the scope of the Brazilian crop. Total South American soybean production will likely increase somewhere between 800 million and 900 million bushels this year at a time when China is finding ways to reduce its dependency on U.S. soybean supplies. Fortunately, renewable diesel production continue to ramp up in the United States, providing an alternative domestic demand source.

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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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