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Perspective: Morning Commentary for August 27

By: Arlan Suderman, Chief Commodities Economist

Guest Commentary by Matt Zeller

 

Market Intelligence – Senior Grains Analyst

 

August 27 – U.S. equities futures are largely unchanged this morning, after an up day yesterday and a move back towards Friday’s record highs; the trade will likely be on edge all day as tech giant Nvidia releases their second quarter results after the bell. The U.S. dollar is higher against a basket of foreign currencies, though still holding below Friday’s high – in range-bound trade since that volatile session. WTI crude oil is higher this morning but quietly off Monday’s top, while the VIX remains subdued below the 15-point level. Two-year treasury yields have slid to their lowest since May 1 following Fed allegations, while longer-term yields are steady as the curve steepens.   

Nvidia has become the symbol for technology and AI progress and the needle for tariff effects – analysts are looking for a sizeable swing in the S&P and NASDAQ in particular post-earnings results tomorrow, if a volatile report is seen. That’s not to mention individual company shares, which are ticking higher in early trade on earnings optimism. The company’s China business hangs in the balance amid the U.S.-China trade war; China accounted for 13% of Nvidia revenue last year, and they reported that tariffs could shave off $8 billion in sales in Q2. They’re still expected to report strong growth this afternoon – a 50+ percent increase for the second quarter – but that pales in comparison to triple-digit growth in recent periods.    

MBA Mortgage Applications fell 0.5% on the week ending August 22, after a 1.4% decline during the week prior as well; home purchases rose 2.2% after rising 0.1% the previous week, while refinancings fell 3.5% after falling 3.1% in the prior week. The average 30-year fixed mortgage rate ticked higher from 6.68% to 6.69%; that’s still on the low end of the steady high-sixes range since late January, the last time mortgage rates averaged over 7%. The U.S. housing market continues to struggle amid “high” mortgage rates, with consumers continuing to look for lower interest rates overall heading into the end of calendar 2025. Pending home sales data for July is on the way tomorrow morning, with a second straight month of declines expected, though weekly jobless claims will be the main focus of a larger economic dataset tomorrow.

U.S. weather maps below are courtesy of Nutrien Ag Weather; longer-term outlooks have been wavering overall but the most-watched European model seems to be fairly set with a cool and dry extended outlook for the Midwest as rains remain south and southwest. It’s already been a dry week for the encircled area below right; do we have enough moisture for a strong finish for these crops? River levels are falling quickly as well, indicating declining moisture supplies. At any rate, it should speed up the path towards harvest and get the combines into the fields earlier, so we can start to see exactly how big the 2025 U.S. corn and soybean crops wind up…

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