Perspective: Morning Commentary for May 18

By: Arlan Suderman, Chief Commodities Economist

Wed, 18 May 2022, 13:37

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 18 – The bounce-back rally on Wall Street lost momentum, with stocks coming under pressure again overnight after Federal Reserve Chair Jerome Powell attempted to convince traders once again that he really is a hawk when it comes to inflation. The VIX is trading just below 28 this morning, with the dollar lingering near 103.5. Yields on 10-year Treasuries are trading near 2.98%. Crude oil prices are 1% higher, while the Ags are mixed to lower. Wheat prices pulled back following recent sharp gains, dragging corn prices lower as well, while soybeans were mixed to higher.

Wall Street lost confidence in the Federal Reserve. The past three Chairs of the central bank – present Chair included – worked hard to convince traders and fiscal policymakers that they had the capability to micromanage the U.S. economy, which was the foundation of being able to follow Modern Monetary Theory. Yet, all three began scrambling this month when things headed south with the economy, suggesting that some aspects of the inflation problem may be out of their control. Their statements added to a rapid erosion of confidence in the central bank’s grasp of the inflation problem, and the necessary solutions for taming it. That led current Chair Jerome Powell to make public statements on Tuesday, trying to reassert the Fed’s resolve for tacking inflation. This comes days after he stated that some of the factors influencing inflation were totally out of the Fed’s control. The other factor in this mess is the Fed’s commitment to increase transparency in its policy development process, which has also been a priority for the above three leaders – Bernanke, Yellen & Powell. That transparency has actually worked to expose the cracks in the foundation that policymakers are quickly trying to mend. The light of transparency exposes their weaknesses.

Housing starts fell slightly to an annualized rate of 1.724 million units in April, down from 1.728 million in March, and below analyst expectations that they would rise to 1.765 million. Permits for new starts also fell to an annualized rate of 1.819 million, down from 1.873 million in March, but slightly above analyst expectations of 1.815 million. The bottom line is that rising interest rates and economic uncertainty are slowing demand for new home construction, but that demand still remains well above the existing supply. One of the factors holding back new starts continues to be supply chain issues. Builders have stated that they can build more homes, but those homes might lack cabinets, garage doors, etc. due to shortages of supplies.

Crude oil prices consolidated just below yesterday’s seven-week highs above $115 overnight. Strength comes from reports that Shanghai is moving toward reopening, although a total reopen will take time. Nonetheless, any reopening progress should be good for demand at a time when global stocks continue to tighten. Sanctions curtailed Russian crude oil output by 9% in April, with output falling 860 million barrels per day from March levels. That’s the sharpest one-month drop in output since the collapse of the Soviet Union. Nearly all other members of OPEC+ are also producing below their quotas. Meanwhile, imports of gasoline from Europe are increasing. It seems that products continue to move into Europe from Russia, with European inventories now more ample than those in the United States, which continues to become increasingly dependent on other countries for supplies.

Ukraine’s Ministry of Agrarian Policy continues to paint an optimistic picture for this year’s crop production, stating that more than 75% of the “planned” spring crop acreage has been planted. Of course, the “planned” acreage is down an estimated 25 – 30% from normal levels due to the war with Russia. Planting of many crops is completed, while farmers continue to plant corn, sunflowers, and buckwheat, amid reports of shortages of fuel, fertilizer, and chemicals. Meanwhile, exports remain a challenge. In fact, Egypt reports that 300K metric tons (11 million bushels) of wheat that it purchased from Ukraine for shipment in February and March remains tied up at Ukraine ports – some loaded and some waiting to be loaded. The United States continues to work closely with European allies to develop routes for shipment of grain out of Ukraine that can bypass Russian blockades, as they consider a broad array of options. Yet, one official close to the talks stated, “This is far from a done deal. There are so many moving pieces, so many things could go wrong with these discussions.” Ukrainian production does no good if it can’t be exported, and that continues to be a major problem.

Day One of the Wheat Quality Council tour of Kansas revealed an average yield of 39.5 bushels per acre, down from 59.2 bpa the previous year and below the five-year average of 46.9 bpa. The group should see the worst of the wheat today, before turning east again into some better wheat to finish the day. Otherwise, we are seeing some windows of opportunity for drying scattered about the Midwest for the remainder of the month, although the windows will be small, and a lot of crops will likely be planted in less-than-desirable conditions. Nonetheless, risks for increased corn prevent plant acres remains high, particularly in North Dakota and in Minnesota. Meanwhile, USDA reports that another 8.4 million bushels of U.S. soybeans were sold to “unknown destinations” overnight, which will be assumed to be China.

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Perspective: Morning Commentary for August 12

August 12 – Today’s focus is on inflation, with the July consumer price index data out this morning. We have this, and one more month of data, ahead of the next Federal Reserve meeting. Of course, headlines from the Middle East and the Black Sea wars also have an ongoing influence on the markets. Stock futures posted gains this morning, while the VIX traded just below 15. The dollar index traded near 99.7. Yields on 10-year Treasuries are trading near 4.66%, while yields on 2-year Treasuries are trading near 4.18%. WTI crude oil is trading near $83, while Brent trades near $88 per barrel. The grain and oilseed markets rebounded from yesterday’s losses ahead of today’s highly anticipated WASDE crop report that is due out at Noon Eastern Time.

Arlan SudermanWed, 12 Aug 2026, 13:33

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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: Mid-Day Commentary for August 10

August 10 - Stocks traded quietly mixed to weaker through much of the morning as investors weigh Middle East war / peace headlines with artificial intelligence concerns / opportunities. Ironically, the VIX is trading near 15, putting it just barely above 2026 lows, despite the high level of geopolitical risks and AI concerns. The dollar index continues to consolidate largely between 99.5 and 100.0 after the late July break in what appeared to be Japanese central bank currency intervention. Yields on 10-year Treasuries are trading near 4.70%, while yields on 2-year Treasuries are trading near 4.24%. WTI crude oil is trading near $81 at this hour, while Brent trades near $87 per barrel on the geopolitical risks. The grain and oilseed markets are mixed ahead of Wednesday's big USDA WASDE crop report.

Arlan SudermanMon, 10 Aug 2026, 17:02

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