Perspective: Morning Commentary for March 3

By: Arlan Suderman, Chief Commodities Economist

Fri, 03 Mar 2023, 14:31

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 3 – Follow-through buying supported stock futures overnight as Treasury yields pulled back from this week’s longer-term highs. The VIX is back below 20, reflecting easing recession fears on Wall Street, with the dollar index weaker near 104.7. Yields on 10-year Treasuries are trading near 3.98%, while yields on 2-year Treasuries are trading near 4.85%. Crude oil prices are 2% lower this morning, after rising to two-week highs on Thursday, while the grain and oilseed sector was generally higher on those easing recession fears that resulted in positive money flow into the sector.

Europe’s economy is following a similar path to the U.S. economy, with the service sector leading the way toward a better-than-expected recovery that raises hopes that the economic block can avoid a recession. S&P Global’s composite purchasing managers index rose to an eight-month high 52.0 in February, up from 50.3 in January, reflecting solid growth during the month. Business confidence is picking up amid evidence that inflation has peaked. It’s a very similar story to that seen here in the States. But we still have a significant inflation problem here in the States, even though all signs point to the peak being in the past, and Europe may face the same reality. Its inflation is even hotter than that seen here in the States, and the gap between inflation and interest rates is even greater as well. As such, we can anticipate that the European Central Bank will follow the same path as the Federal Reserve. Look for a consistent message between the two central banks, calling for higher rates for longer than the market anticipates until inflation is brought under control.

The longer-term question continues to be, is it possible to bring inflation under control with a soft landing, or one that avoids a recession altogether? The answer to that question revolves around the definition of bringing inflation “under control.” The Federal Reserve currently defines that as bringing inflation back to its 2% mandate. I would argue that it will be next to impossible to bring overall inflation back to the 2% mandate without a more significant recession due to the current fiscal policies in place that impact both energy and labor, especially in light of escalating geopolitical risks involving China and Russia. Our labor force is shrinking, we’re bringing production back home from overseas, and energy policies are set up to limit supplies relative to demand, with alternative energy supplies still more expensive than traditional energy sources. There are many other factors that I could point to as well that are inflationary by default. Bringing inflation down to the current mandated 2% level amid these factors will be very difficult without inflicting a great deal of pain on the economy. So, the question is, will policymakers change the rules of the game? Will they raise the mandate to a higher level – say 3%? I’m not advocating for such a shift, but I do think the day will come that we will see that done to avoid the pain that would otherwise be necessary for the Federal Reserve to do its prescribed job.

Russia is on the cusp of its first significant victory in six months, as its troops besiege the city of Bakhmut in Ukraine. Just one road remains open for civilians and troops in the city to escape, as the city is nearly surrounded. Russia continues to shell that western escape route heavily to discourage attempts of those in the city desiring to escape. Ukrainian soldiers are busy trying to repair the escape route, with other troops heading to the frontline, suggesting that Ukraine is not yet ready to concede the city. Bakhmut had a pre-war population of 70,000, and its capture would mark the first significant victory for Russia since it called up hundreds of thousands of reservists last year to change the dynamics of the war. Meanwhile, Russia reports a number of drone attacks deep inside of Russia as the war continues to escalate.

There are three possible scenarios for the “grain initiative” that currently allows Ukraine to export grain and other products through three ports until March 19^th, according to the general director of the Ukrainian Club of Agrarian Business. The first possible scenario is the most expected one – that the initiative will be extended for at least another 120 days. The second potential scenario assumes that the initiative is not extended, but that Ukraine is able to continue exports without Russia’s involvement. That would likely make it more difficult for shippers to get insurance coverage, but it’s already been announced that roughly 20 billion UAH will be allocated to subsidize coverage. The third possible scenario is that the initiative is not renewed, Russia will arrange provocations including attacks on ports and ships, leading to Ukraine giving up on the port option. That would necessitate focusing only on land exports to the west, limiting grain movement. That would encourage a greater shift by farmers to oilseeds. Remember, China gets much of its corn from Ukraine.

The door is now open for GMO wheat – at least it’s being pushed open at an increasing pace. First, we saw Argentina develop genetically modified seed for wheat production focusing on genetic traits that improve the crop’s ability to withstand drought. It received less blow-back than expected from the world community, so now Brazil has allowed the cultivation of GMO wheat within its borders as well. The cat is now out of the bag, as we say in the States, meaning that it will be difficult for opponents to shut the door again. The world is too concerned about food shortages amid the current geopolitical risks, and it sees the GMO technology as a way to increase the production of food.

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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

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

Perspective: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

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

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