Perspective: Morning Commentary for May 12

By: Arlan Suderman, Chief Commodities Economist

Tue, 12 May 2026, 13:35

Today's Perspective Video: Pivotal Week for the Commodities

May 12 – The energy and food-based commodities rallied, while stock future fell overnight on fears that the Iran war may be on the cusp of escalating. Additional concerns centered around this morning’s highly anticipated inflation data. The VIX is trading near 19 this morning, while the dollar index trades near 98.3. Yields on 10-year Treasuries are trading near 4.44%, while yields on 2-year Treasuries are trading near 3.99%. WTI crude oil prices are trading near $102 per barrel this morning, while Brent trades near $108 per barrel. The grain and oilseed markets followed energy prices higher as both a fertilizer and an inflation trade, with wheat getting an added boost from sharp deterioration in winter wheat crop ratings late on Monday.

The headline consumer price index rose 0.6% on the month in April, matching analyst expectations, but down from the 0.9% surge seen in March. The headline CPI rose 3.8% year-on-year in April, again matching analyst expectations, but up from 3.3% in March. The core CPI that excludes the more volatile food and energy sectors rose 0.4% on the month in April, exceeding analyst expectations of a 0.3% rise, and doubling the 0.2% pace seen in March. The core CPI rose 2.8% year-on-year in April, up from analyst expectations of 2.7%, and up from 2.6% in March. Everyone expected the headline numbers to reflect the inflationary pressures of the Iran war, but the rise in the core numbers exceeded market expectations – not by a great amount, but by enough to be concerning.

Breaking down the numbers, fuel oil led the way with 5.8% gains on the month in April, followed by gasoline with 5.4% monthly gains. Fuel oil prices are now up 54% year-on-year, with gasoline prices up 28%. Electricity prices rose 2.1% on the month, and up 6.1% on the year. But it wasn’t just energy prices that surged. We also saw food prices purchased for home consumption rise by 0.7% on the month in April. These all contributed to the rise in the headline inflation number. However, analysts did not expect the core inflation numbers to rise as much as they did. That was a product of apparel prices rising 0.6% on the month, along with housing jumping 0.7% on the month. Overall shelter costs rose 0.6% on the month, contributing to the rise in service sector inflation. Partial offsets in today’s inflation data came from a 0.1% decline in piped natural gas prices, while new vehicle prices fell by 0.2% this month and medical care commodities dropped by 0.4%. The recent good jobs data eases pressure on the Federal Reserve to cut its benchmark interest rate, while the hawks on the Fed will look at today’s core inflation numbers as a reason to put the possibility of a rate hike back into discussion for later this year.

The ceasefire with Iran is “on life support” according to President Trump, as frustrations over the ongoing stalemate increase. President Trump called Iran’s latest proposal “garbage” and he said that he didn’t even finish reading it. Iran continues to insist on permanent control of the Strait of Hormuz, which is unacceptable to both the United States, as well as many other nations in the region. Iran also seeks to hold onto its nuclear ambitions. Iran is holding fast, believing that it can outlast President Trump, and come out stronger in the end. That strategy makes sense. First, that’s probably its only hope of survival, and second, Iran knows that political pressure will continue to mount on President Trump as Americans have shown in the past that they’re more interested in maintaining the comforts of life than they are in paying the price required to win the fight for national security. Iran sees the same media headlines that are focused on consumer surveys reflecting the above. President Trump thus far remains locked in on his desire to take away Iran’s ability to have nuclear weapons, as well as to not give Iran total control of the Strait of Hormuz. Iran is betting that the pollical pressure will eventually lead him to waiver on his red line as the midterm elections approach. The bottom line is that we’re not likely to have resolution any time soon, which means that global energy and fertilizer supplies will continue to shrink.

Today’s USDA WASDE report is one of the two biggest of the year – the other being the January report. Today’s report will include the agency’s first supply and demand balance sheets for the 2026-27 marketing year, which will become the filter through which all other fundamental news will be viewed in the months ahead. We’ll also see USDA’s first winter wheat production estimates developed from actual field surveys. Today’s numbers take on added intrigue after yesterday’s USDA crop progress report showed that 40% of the nation’s winter wheat crop rates Poor to Very Poor this week, up from 37% the previous week. The crop’s condition index score that takes into consideration all of the rating categories is 277, down from 286 the previous week, down from 338 in the same week last year, and down from the 10-year average for the week of 324. Just 5 previous crops since ratings began forty years ago had lower scores at this point in the growing season. The next question will be the scope of abandonment, where farmers determine that yields will be too low to harvest amid today’s high diesel prices. Otherwise, the focus will be on USDA’s corn and soybean demand estimates for the coming year.

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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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