Perspective: Morning Commentary for December 7

By: Arlan Suderman, Chief Commodities Economist

Wed, 07 Dec 2022, 14:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 7 – Recession fears continue to over-shadow China opening enthusiasm on Wall Street, with stock futures generally weaker overnight. The VIX is trading near 23 this morning, as fear levels slowly rise on Wall Street. The dollar index slipped lower to trade near 105.0. Yields on 10-year Treasuries are trading near 3.46%, while yields on 2-year Treasuries are trading near 4.29%. Crude oil prices fell to fresh 11-mnth lows below $73 per barrel this morning, although they are currently trading modestly higher on the day nearly $2 off their session lows. Grain and oilseed prices are generally mixed to higher in early trade.

Non-farm productivity rose at an annualized rate of 0.8% in the third quarter, which is twice the pace expected by analysts and a sharp upward revision from the original estimate of 0.3%. This is the second estimate for the third quarter reflecting additional data that came in. Unit labor costs increased at an annualized rate of 2.4% in the third quarter, which is down from the 3.5% originally reported due to the above increase in productivity. Analysts had expected a revision down to 3.3%. This data would suggest that wage inflation is less of a problem that previously believed, suggesting that the Federal Reserve can ease up, but it also runs contrary to many other reports.

China revealed 10 steps toward easing restrictions and requirements related to Covid today, as was widely anticipated. The revised measures reflect some of the changes already seen in nearly a dozen cities. Authorities are now officially allowing those with positive Covid-19 tests to quarantine at home, rather than report to government sanctioned facilities. Those in close contact with positive testing individuals should also quarantine at home for five days. Those areas deemed to be high risk for infection leading to lockdowns should be limited to specific housing buildings, rather than entire residential complexes. The next step that we’re watching for would be for China to downgrade Covid-19 to a category B disease from its current category A status, which would fundamentally change the way the virus is handled. This would be expected to further ease containment rules.

Today’s 10 measures represent one more step toward reopening China’s economy. The momentum is clearly in that direction, and it would be very difficult to go backward at this point. These steps are clearly in the direction of reopening China’s economy, but the path will not be smooth. You will note some reports of declining Covid numbers, but that is largely a reflection of the new policies dropping the testing requirements. Keep in mind that 90%+ of the positive tests coming out of the near daily testing requirements were asymptomatic. These are people who will have no reason to get tested once the requirements are dropped, because they won’t even know that they are carriers. As such, we can expect an initial decline in numbers, before they grow again as the virus moves more uninhibited through the Chinese population. Part of the population is excited about their new-found freedoms, which should result in an increase in economic activity. But part of the population will remain fearful, as I outlined yesterday. This will limit the full economic recovery until full herd immunity is established within China. Nonetheless, we should see a resumption of demand for commodities in 2023 as China’s economy starts to recover.

Activity at Ukraine ports picked up a bit today, with four vessels carrying agricultural products leaving Ukraine for Asia and Europe. Those vessels contained 149.3K metric tonnes of agricultural products, including one vessel carrying 37.5K mt of vegetable oil destined for India. Another 20 ships are currently in port loading up with 613.2K mt of products, with three vessels moving toward Ukraine to load up with products. The war continues to evolve in Ukraine, with Russia focused on using missiles and drones to attack Ukraine’s water and electricity infrastructure. Meanwhile, there’s been an increase in significant explosions at various military bases deep inside of Russia that appears to reflect new Ukrainian capabilities in the war. Ukraine celebrates the damage done in these attacks, but has yet to claim credit, simply responding that, “Those Russians tend to smoke where they shouldn’t.”

Corn and wheat charts remain wounded following the recent selloff, although prices attempted to bounce overnight. A more significant technical bounce can’t be ruled out, but rallies are still being sold. Market bulls are still focused on the soybean and soymeal markets. Both of these markets are nearing areas of technical resistance, so it will be interesting to see how the Algos handle this. Fundamentally, China should remain active buying for a few more weeks until new-crop Brazilian supplies become available. There’s also a growing focus on the intense drought in Argentina, although that is offset by what currently appears to be a very large crop in Brazil.

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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: 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

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