Perspective: Morning Commentary for March 17

By: Arlan Suderman, Chief Commodities Economist

Fri, 17 Mar 2023, 13:28

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 17 – It’s another “risk-off” day on Wall Street today, as banking turmoil continues to create fear in the investment world. The VIX is trading closer to 24 today, suggesting that moderate fear levels are likely to carry over into the weekend ahead of next week’s pivotal Federal Reserve meetings. The Federal Reserve has difficult decisions to make next week. It faces pressure to pivot its monetary policy to ease pressure on regional banks. Failure to do so could increase contagion risks. The European Central Bank stayed the course, believing that its banks will be able to withstand the rate hikes. The Fed is no-doubt doing that assessment now ahead of next week’s meeting, as it knows that pivoting now could send a message of panic to the markets, while also allowing inflation to get an even stronger foothold. Look for headline risk to continue into at least mid-week next week as traders wait for direction from the Fed.

For today, the dollar index is softer at 104.2 following yesterday’s rate hike in Europe, while yields on U.S. 10-year Treasuries are trading near 3.46% and yields on 2-year Treasuries are trading near 4.06%. Crude oil prices are 1% lower as they follow stocks lower, but the grain and oilseed sector is the one bright spot in the markets. More CFTC data was released yesterday showing a much larger liquidation by the speculative funds than anticipated, especially in the corn market where demand from China has dramatically improved on the recent price break. USDA announced another sale of 7.5 million bushels of U.S. corn to China this morning, pushing this week’s known sales to more than 80 million bushels. Additional support for corn and wheat prices comes from the rising tensions in the Black Sea Region.

China switched strategies several weeks ago to go from giving the appearance of a silent bystander in world affairs to seeking the appearance of a leader in solving problems – and that includes the Ukraine war, in addition to a peace initiative between Iran and Saudi Arabia. China has a vested interest in having a healthy Russia as a partner in its evolving battle with the United States and the West. Russia risks of a defeat in Ukraine rise the longer that the conflict goes. As such, China made itself an active participant in seeking a resolution that would make sure that Russia does not lose. There is even talk of President Xi Jinping traveling to Moscow to visit with Russian President Putin in the near future. China’s preferred plan that it proposed is a ceasefire while negotiations take place, with Russia maintaining possession of ground that it currently occupies in Ukraine. That’s a non-starter for Ukraine and the West, as history argues that Russia has used this strategy in the past to regroup for its next assault. The question now is, what will be China’s next option? Will it be to provide lethal aid to Russia amid reports that its troops are running out of ammunition and other needed weaponry? Chatter currently emerging from Washington suggests that the State Department is seeking support among other Allies to implement financial sanctions on China if it provides lethal support to Russia. We can only speculate on what those sanctions might be, but it would likely put U.S. commodity trade with China in greater peril.

Is African Swine Fever back in China? Truth is, it never left. Nonetheless, industry reports emerging from within China suggest that the problem is re-emerging there, and that the virus may have mutated into something that is more difficult to contain with biosecurity measures. There are few official reports, and anecdotal reports seem to go from one extreme to the other. But there does seem to be an increase in incidence, with some reports suggesting that up to half of China’s provinces may be battling the disease currently. An industry survey suggests that the total number of infections this winter may already have topped the total from all of last year, so the problem is definitely increasing. Some surveyed farms have already reduced their breeding sow numbers by 20 to 30%. Again, it’s difficult to verify the reliability of these survey results, so we have to look at other indicators. Today’s edition of China Direct, published by our Shanghai office, reports that piglet prices rose 13.3% from early February into late last week, suggesting a declining supply of pigs relative to demand. Feeding margins are not good currently, so it’s difficult to argue that demand had risen. Rather, the assumption is that the supply of pigs has declined. If so, we can anticipate a decline in corn and soymeal demand this summer.

Russia extended the grain initiative ahead of this weekend’s expiration, but only for 60 days. The problem is, the wording in the original initiative specifically states that it must be extended with the same terms as were originally negotiated, which is 120 days. As such, Ukraine insists that any extension automatically means 120 days – taking it to mid-July. This sets up a conflict, with shippers caught in the middle. Ironically, the 60 days may have significance for what the future may hold as well. One of the primary proponents of the agreement is Turkish President Erdogan. He recently moved up the date of the next election to May 14, at which time he is expected to win another term in office. Turkey benefits greatly from the initiative, that requires that all ships going to and coming from Ukraine’s ports be inspected at a Turkish port. A 60-day extension would extend just past Turkey’s election date. Russia doesn’t want to upset Erdogan, but what does that mean for the future of the initiative beyond 60 days? That concern is getting a bit more attention in the markets, particularly with Argentine production estimates continuing to tumble.

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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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