Perspective: Morning Commentary for November 4

By: Arlan Suderman, Chief Commodities Economist

Thu, 04 Nov 2021, 13:13

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 4 – Stocks are poised to add to their record run after the Federal Reserve told the markets what they wanted to hear on Wednesday. The Fed laid out a plan for a very gradual tapering of its asset purchasing program that traders believe will allow the money to continue flowing into the markets. The VIX is probing four-month lows this morning below 15, reflecting the optimism. The dollar index is notably higher near 94.3 as yields on 10-year trade near 1.56%. Crude oil prices are 2% higher this morning, as they bounce off three-week lows set yesterday. The Ags are mixed to higher as money flowed into the broader commodity sector, after a broad-based sell-off on Wednesday. Wednesday was a tough day for many of the markets, but Thursday is starting off on a positive note.

First-time claims for unemployment benefits totaled 269K in the week ending October 30^th, down from 283K the previous week and a new post-pandemic low that came in below analyst expectations of 277K. This dropped the four-week moving average to 284.75K claims, down 15K from the previous week. Continuing claims of those who say they are still unable to find work fell to a new post-pandemic low as well at 2.105 million, down another 134K from the previous week. Other data released this morning showed that non-farm productivity fell at an annual rate of 5.0% in the third quarter, while unit labor costs rose a strong 8.3% year-on-year, reflecting strong wage inflation.

Is Fed Chair Jerome Powell out of touch? That’s the question being discussed on Wall Street following Wednesday afternoon’s press conference. Personally, I don’t think he’s out of touch. Rather, I think he is doing what he believes that he has to do to get reappointed. Failure to get reappointed would obviously be a disappointment to Powell, but it would likely result in increased volatility for the markets as well, at least until it became clear who his replacement would be at the Fed. In the meantime, Powell continues to make statements that simply do not make sense, which is what he must do to justify the central bank’s positions in the current environment.

The Federal Reserve will begin to taper later this month, as expected. It is currently buying $80 billion in Treasury securities per month, along with $40 billion of agency mortgage-backed securities (MBS). It will reduce the Treasury purchases by $10 billion per month, and the MBS by $5 billion per month starting this month. That means that the Fed will continue to stimulate the economy by expanding its balance sheet for the next eight months, before bringing its plan to an end. The Fed’s balance sheet is expected to be just over $9 trillion by June when the tapering ends, up from $4.1 trillion just ahead of the pandemic and up from $0.9 trillion ahead of the Great Recession of 2008-09. Then, we’ll need to see how long it takes before it starts removing the massive stimulus of the past two years from the economy. The Fed last tried to shrink its balance sheet at a very slow pace in 2018-19, but it had to reverse policy because demand for bank reserves exceeded the Fed’s supply, leading to liquidity issues. The system is addicted to printed money. As such, the Fed may try to allow the economy to grow relative to the balance sheet so that its size as a percentage of GDP shrinks. The Fed indicated that there is currently no need to raise interest rates, with none seen in the near future either. Look for that sentiment to get challenged as we head into 2022.

Powell made some very curious statements during his press conference. He stated that “transitory” inflation means that it is not “permanent” inflation. Well, when have we had permanent inflation in the United States? He also stated that higher wages are not contributing to inflation. I am not aware of a single economic model that would back that up. Furthermore, Powell stated that current inflation pressures are entirely due to supply chain disruptions as the economy reopens, so that everything will be fine as long as those are corrected. He totally misses the impact of a hyper-stimulated consumer due to massive fiscal and monetary stimulus that artificially elevates demand, which further aggravates the normal transitory aspects of reopening an economy. That added stimulation will remain in the system for quite some time under current fiscal and monetary policy. Many of the current miscalculations were also made in the late 1970s, which led to runaway inflation that necessitated that Paul Volker push rates to nearly 20% to bring everything back down to earth. I’m not saying that will be the end result of the current path that we are on, but that risk is there if we stay on this path, and that would have significant implications for the commodity markets.

Money flow is positive for the bulk of the commodities to start the day today, with the Fed statement behind us now. That puts commodity inflation, rising demand for renewable energy feedstocks, and rapidly rising crop input costs at the forefront again, although Ag traders must first deal with next Tuesday’s big USDA WASDE crop report.

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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

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

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

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

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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