Perspective: Morning Commentary for November 23

By: Arlan Suderman, Chief Commodities Economist

Tue, 23 Nov 2021, 14:30

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 23 – Stocks stumbled overnight, but they didn’t collapse, as Wall Street balances strong economic data and earnings reports with rising interest rates and rising global Covid risks going into a U.S. holiday period. The VIX pushed to nearly 21 overnight – a nearly seven-week high – before settling to trade near 19 as today’s session begins. The dollar index firmed to a new 16-month high at 96.6 early today as Treasury yields rose, before pulling back a bit. Yields on 10-year Treasuries traded to a four-week high just below 1.67%, before pulling back to 1.64%. Crude oil prices are 1% higher in early trade, while the Ags were mostly lower overnight. Expect some erratic trade the remainder of this week as trade volume traditionally drops off for the Thanksgiving holiday. The markets will be closed on Thursday for the holiday, while they reopen for a short trading session on Friday.

The Biden Administration reports that it will release 50 million barrels of oil from the Strategic Petroleum Reserve to ease inflationary pressures in the energy sector. The Administration coordinated this move with China, India, South Korea, Japan and Britain to increase oil supplies after OPEC+ declined a request to escalate output beyond their existing plan. OPEC+ is wary of increasing supplies too fast amid rising Covid numbers that are producing new lockdowns in Europe, China and elsewhere. It’s estimated that the SPR currently holds roughly a 36-day supply, although only about 4.4 million barrels per day can be released due to logistics limitations. Today’s release announcement would allow for the equivalent of a two-to-three-day supply to be released. The United States consumes a little over 18 million barrels of oil per day. Today’s announcement was largely anticipated by the market, with crude oil prices pushing higher following confirmation of the SPR release.

A fourth wave of Covid-19 continues to spread across Europe, as governments impose more stringent restrictions that are expected to reduce consumption patterns in the economic block as we approach the holiday season. Austria placed strict measures in place to control the spread of the virus, mandated vaccines and put a nationwide lockdown in place starting on Monday. France and Switzerland are requiring vaccine passports, while Belgium asked people to work from home four days a week. All of this reduces energy consumption, while also altering consumption of other goods and services. About two-thirds of Europe has been vaccinated, but rates vary widely from country to country. For example, 81% of citizens have been vaccinated in Portugal, while roughly a quarter of those living in Bulgaria have been vaccinated. Government responses to the latest round of Covid cases have also varied considerably. I mentioned the lockdowns in some locations, but Britain and France have both indicated that they currently have no plans for shutdowns. Nonetheless, the net result is a reduction of travel and economic activity for Europe as a whole.

Poultry demand surged in China at the height of the African Swine Fever outbreak in the hog industry that slashed pork production by 60- to 70% by our estimates. However, poultry feeding margins are in the red as consumer demand slowly returns to pork as hog feeding rebounds. As such, poultry production is contracting, reducing feed demand from the sector. However, hog production is recovering as demand returns and feeding margins move back into the black. Cash hog prices are up 71% since their low in early October, although futures prices are only up 21% over the same period. Feeding margins are estimated at a positive 135 – 283 yuan per head, depending on the facilities and on their cost structure. This raises concerns that the cycle may be again moving toward over production in China’s never-ending roller coaster cycle for the hog industry. There are fears that the government’s intervention in September and October, when prices were their lowest, may have “saved” the industry before it had shed enough of its excess capacity. That could end up extending the oversupply situation longer. Current demand is also elevated as retailers stock up ahead of the annual Lunar New Year celebrations at the end of January.

Soybean crush is back above 2 million metric tons per week in China on the return of profit to the hog industry. November soybean arrivals into China should return to roughly 9 million metric tons, based on arrivals and the estimated arrivals of soybeans already on the water enroute. Soybean stocks at the ports available to crushers fell to roughly 3.5 mmt due to slow October arrivals, but they appear to have leveled off. Brazil shipments accounted to 2.66 mmt in October, while they should reach 1.5 mmt this month, with U.S. supplies accounting for the bulk of the rest of the arrivals. USDA indicates that China has 7.549 mmt of undelivered purchased soybeans on the books, with “unknown destinations” another 5.93 mmt. The first Brazil new-crop soybeans should arrive in LH February.

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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

Perspective: Morning Commentary for August 7

August 7 – The U.S. economy unexpectedly lost 23k jobs in July, dramatically below market expectations of an 80k increase and marking the worst Non-Farm Payrolls print since February. Furthermore, May and June were both revised sharply downward, with combined revisions showing 103k fewer jobs than previously reported. Outside of the healthcare sector, which added 22k jobs in July, the losses were very broad-based. Government payrolls saw the largest decline, shedding 53k jobs in July, the largest seen since October 2025, while June was revised down to show a loss of 10k jobs as well. The private sector at least saw growth, adding 30k jobs in July, now matching the month prior after it was revised down from the 49k initially reported, and substantially missing forecasts of 78k jobs being added. This is a sharp reversal in course from the largely better than expected U.S. labor data seen earlier this week.

Mike CastleFri, 07 Aug 2026, 13:26

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Grains & Oilseeds

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