Perspective: Morning Commentary for May 12

By: Arlan Suderman, Chief Commodities Economist

Thu, 12 May 2022, 13:26

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 12 – It’s Day #2 for inflation data today. Yesterday’s focus was on inflation at the consumer level, while today’s data focuses on the producer level. It was a roller coaster ride for money flow on Wednesday, but the bottom line was continued selling on a lack of confidence in policymakers as stocks closed near session lows, while commodity prices found a good buy – especially many of the food and energy commodities that both have a fundamental story, and which also have been seen as a hedge against inflation. The VIX traded near 35 again overnight, reflecting heightened levels of anxiety ahead of the inflation data release, while the dollar spiked to a fresh 19-year high above 104.7. That combination created headwinds for the commodities, with the Ags also cautious ahead of today’s big USDA WASDE crop report, which is probably the second biggest report of the year that frequently contains surprises. The dollar is trading near 104.4 at this hour, while yields on 10-year Treasuries are trading near 2.86%. Crude oil prices are mixed, while most of the Ags are modestly lower.

The producer price index rose 0.5% month-on-month in April, matching analyst expectations. However, the March number was revised to an increase of 1.6% month-on-month, up from the 1.4% originally reported. The PPI was up 11.0% year-on-year in April, which was down from 11.2% the previous month, but it exceeded analyst expectations that it would be up 10.7%. The core PPI that excludes the more volatile food and energy components rose 0.4% month-on-month in April, falling short of analyst expectations of 0.6% gains. March was revised to 1.2% gains, up from the 1.0% gains originally reported. The core PPI rose 8.8% year-on-year in April, which was slightly below analyst expectations of 8.9%, and below the 9.2% seen the previous month. Today’s produce price data fits a bit better with expectations that the year-on-year numbers would start to moderate over the next several months when compared to year ago levels that were in the process of rising, but the moderation overall is a bit less than expected.

The bottom line again is that the headline numbers may be moderating as expected, but inflation overall appears well entrenched into the economy. History tells us that 50-basis point rate hikes won’t do the job of taming inflation, nor will the slow process of shrinking the balance sheet. The problem is though that the economy is slowing, making it even more difficult for the Fed to get more aggressive on fighting inflation. I do not currently see us on a path of an economic collapse, but rather on a sluggish grind of stagflation, where the economy slips into an extended period of sluggish growth and high inflation. Treasury yields remain negative relative to the pace of inflation, stocks are struggling, and money flows toward the hard assets that have a fundamental story.

First-time claims for unemployment benefits totaled 203K in the week ending May 7, up slightly from 202K the previous week, but above analyst expectations of 190K claims. That pushed the four-week moving average to 192.75K claims, up from 188.5K the previous week. Continuing claims of those long-term unemployed unable to find a job fell another 44K to 1.343 million, which is the lowest level for this indicator since January 3, 1970, when it was 1.332 million. We’ve seen a bump in weekly claims in recent weeks, although those numbers remain within historical norms, while the longer-term numbers continue to suggest a very tight labor market that continues to support ongoing wage inflation pressures. Slowing wage inflation will likely require pushing unemployment higher, which means some degree of pain for the economy, unless policymakers can encourage a larger increase in the labor force participation rate to bring more people back to work.

USDA reports that exporters sold 24.1 million bushels of U.S. corn to China overnight, with 21.4 million bushels of that total designated for new-crop delivery in the next marketing year. The news followed USDA’s weekly export sales report that showed many commodity sales at marketing year lows for the week ending May 5. Unlike many other times this year, we did not see a pop in grain and oilseed prices when the inflation data came out today, but that may have been because it coincided with that dismal weekly export sales report, and because traders are being cautious ahead of today’s highly anticipated USDA WASDE crop report. I expect USDA to continue to tighten the old-crop soybean balance sheet in today’s report, but I think the bulls will be lacking for a lot of other fodder in today’s numbers, based on my experience of how USDA creates these reports. Soybeans have the best shot at growing their way out of tight supplies over the coming year if the weather cooperates. Corn supplies are probably most at risk of getting tighter in the months ahead, although wheat isn’t out of the woods yet either. Rains start increasing again in the Midwest as we move through the weekend and into next week, and temperatures moderate.

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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

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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

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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

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