Perspective: Morning Commentary for November 12

By: Arlan Suderman, Chief Commodities Economist

Fri, 12 Nov 2021, 14:33

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 12 – Stock futures posted modest gains overnight, as Wall Street heads into the weekend on a positive note following a week focused on high inflation rates, and discussions about the future of monetary policy. The VIX is trading near 17 this morning, reflecting easing fears on Wall Street. The dollar index is trading near 95.1, after posting fresh one-year highs early this morning. Yields on 10-year Treasuries are trading near 1.55% following yesterday’s holiday break. Crude oil prices are more than 1% lower in early trade, while the Ags were mixed to lower in overnight trade.

Inflation continues to be the talk of Wall Street this morning, although like any story, headline fatigue will shift the focus to new items as we move into the coming week, and then into the holiday period. Inflation shows no signs of going away, but it has not yet caused the consumer to slow spending. In fact, some analysts expect consumer demand to rise by 8 – 10% in the upcoming holiday shopping season, further contributing to those inflation pressures. The consumer remains cash rich enough to pay the higher prices currently. Bank accounts are generally larger than they were prior to the pandemic, with currency in circulation up 23% from pre-pandemic levels, while M2 money supply is up 36%. Both are showing some signs of slowing growth following the pandemic surge of stimulus, but we have not yet seen signs of a decline, meaning that the consumer still has ample money to pay these high prices. We’ll get the results of this month’s consumer sentiment survey later this morning to see if it shows any signs of the consumer slowing his/her spending due to inflation fears.

Covid-19 is the top story in China again this morning. Authorities reported another 79 cases yesterday. That’s a low number relative to much of the rest of the world, but it’s a big number in a country adamantly committed to its zero-tolerance policy. Furthermore, 51 of the new cases were tied to the port city of Dalian, and not to the other national cluster cases reported in recent weeks. The Dalian cases started with a person in the cold chain handling network. The science doesn’t necessarily agree on the risks of cold chain Covid risks, but China believes there is sufficient risk to take drastic measures, shutting down its cold chain handling at Dalian today. Keep in mind that China is a major re-export hub. It imports seafood, processes it, and the re-exports it. This could hit European and U.S. seafood markets with shortages ahead of the holiday season. Today’s China Direct, published by our Shanghai office, notes that these shutdowns could negatively impact bulk freighters as well, further disrupting freight markets.

Don’t expect China to abandon its zero-tolerance policy any time soon. A health official reiterated China’s support for the policy today. Authorities have their eyes on Singapore, which is making the shift toward “living with Covid.” It has a higher vaccination rate than China, with what are seen as higher quality vaccines as well. Singapore’s current per capita Covid infection rate is higher than the United Kingdom’s rate. Translating that into China’s population would mean more than 730K cases per day. Assuming a similar death rate would translate into 3,200 Covid-related deaths per day. China’s zero-tolerance policy has been working at keeping numbers low, but it is becoming more challenging to do so with the newer mutations. Furthermore, maintaining the policy creates more and more challenges for supply chain disruptions for China, as well as for the rest of the world. China’s economy is suffering from a change in consumer behavior due to the policy, and its shutdowns are complicating supply chain problems, while contributing to global inflation problems.

USDA reported the sale of 9.4 million bushels of U.S. soybeans to “unknown destinations” overnight. The delivery times were unspecified in the sale. The market will assume this to be another sale to China. USDA’s sales report for the week ending November 4^th included net sales of 47.4 million bushels, with 34.5 million bushels designated for China. However, 21.4 million of those bushels were a reassignment of bushels already previously sold to “unknown destinations.” China just completed what it calls a record corn harvest, yet cash corn prices are so high that livestock producers are again shifting back to feeding wheat, with the past two week’s U.S. weekly export sales reports showing large grain sorghum sales to China as well. Chinese sources put the blame on farmers holding corn for higher prices, creating a near-term push in cash prices. The increased wheat feeding creates additional concerns following large volumes fed this summer, as a persistently cold wet fall lowered winter wheat planted acreage, raising concerns about a possible short crop in 2022. There’s an expectation that Chinese buyers will raise their imports of quality milling wheat in the months ahead, with global supplies already tight.

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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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