Perspective: Morning Commentary for October 27

By: Arlan Suderman, Chief Commodities Economist

Wed, 27 Oct 2021, 13:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

October 27 – Stocks are poised to build on their record run this morning, fed by strong third quarter earnings, albeit with some caution ahead of next week’s Federal Reserve meeting. The VIX is trading near 16 this morning, indicating that fear levels are relatively low on Wall Street. The dollar index is trading near 93.8, while yields on 10-year Treasuries are trading near 1.57%. We’re seeing a risk-off move in the global commodity markets this morning, led by a decline in China. Crude oil prices are off roughly 2% this morning, while the Ags are mostly lower as well.

Durable goods orders were down 0.4% month-on-month in September, while the August durable goods orders data was revised lower to show 1.3% growth, versus the 1.8% growth originally reported. Nonetheless, today’s headline number was better than analyst expectations that orders would be down by 0.9%. Durable goods orders minus transportation were up 0.4% month-on-month in September, versus trade expectations of 0.5% growth and versus 0.3% growth the previous month. Core durable goods orders, which represents business investment closely followed by the Federal Reserve, were up 0.8% month-on-month in September, which was double analyst expectations of 0.4% growth and up from 0.6% growth the previous month.

“The 1970s All Over Again? Stagflation Debate Splits Wall Street.” That was the headline from Reuters this morning, highlighting worries among investors about rising inflation risks amid slowing economic growth. This provides the backdrop for next week’s meeting of the Federal Reserves monetary policy committee, which is seen as critical for reassuring investors that the central bank adequately understands the risks, and that it has a plan to successfully manage those risks. Inflation rates are still just half the rates seen at the end of the 1970s, but many investors do not like the direction in which we are heading.

Investors fear that the Fed will be too slow to act, allowing rates to get out of control, as they did more than forty years ago, when the consumer price index rose to a staggering 13.5% year-on-year pace. That necessitated Paul Volker’s Fed to raise interest rates to nearly 20% to bring inflation back under control. That wasn’t good for anybody, but it was perhaps what was necessary to fix the problem. There’s a big divide on Wall Street over whether we are moving towards a repeat of the 70s stagflation, with well-respected people on both sides of the argument. Yet, the point of the article is that “stagflation” is one of the most frequently heard words now among investors, indicating the significance of next week’s Fed meeting. Investors need reassurance next week from the Fed. It is a meeting in which the Fed cannot afford a misstep in its communication with the investment world.

Commodity inflation is a big part of the inflation story that is, to a great extent, separate from the supply chain disruption argument, although there is some overlap. A look at year-on-year changes for commodities finds that oats leads the way, up 128% from the previous year, followed by a 119% increase in heating oil as we approach the heating season. Crude oil is up 111% year-on-year, while natural gas is up 86%. Let’s not overlook coffee, which is up 93%, soybean oil up 82%, canola up 80%, cotton up 50% and lumber is still up 45% year-on-year, even though it is down 62% from its high May high.

Today’s China Direct, from our Shanghai office, notes that 50 new Covid cases were reported today, with the latest reports presenting some risks to the soybean crush industry. Regionalized lockdowns are expanding as China tries to eradicate this latest outbreak of Covid-19. There are now several new cases and transmission of Covid-19 in Rizhao, Shandong, which is a major soybean import and crushing hub. The lockdowns to stop the spread of Covid could reduce soybean demand, particularly if the spread is not quickly brought under control. Authorities have already locked down one area outside of Rizhao, prohibiting residents from leaving, with most things being shut down. China’s zero-tolerance policy has been successful at controlling Covid-19 to this point, but it has come at quite a cost, with that cost impacting much of the rest of the world as well.

Broad-based selling emerged in the commodity sector overnight. It’s yet to be seen if the sell-off will have staying power in the day session. The story to this point has been end user and investor buying of the dips in the commodity market, fearing even higher prices in the future as inflation ramps up. That will change at some point, but the breaks have been bought thus far. Midwest harvest progress slows dramatically this week, with increased risk of field loss.

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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

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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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