Perspective: Morning Commentary for February 16

By: Arlan Suderman, Chief Commodities Economist

Thu, 16 Feb 2023, 14:38

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

February 16 – Stock futures were under modest pressure overnight ahead of this morning’s inflation data release as Wall Street remains on edge. Stock futures added to their losses on the data release, which created an even stronger argument for hawkish monetary policy. Yet, the VIX continues to trade near 19, indicating a lack of any real panic on Wall Street. The dollar index is trading near 104.0. Yields on 10-year Treasuries are trading near 3.85%, while yields on 2-year Treasuries are trading near 4.65%. Crude oil prices are modestly higher, as they find value below $80. The grain and oilseed sector was mostly weaker overnight.

Headline inflation at the producer level fell to 6.0% year-on-year in January, down from 6.2% the previous month, but above analyst expectations of 5.5%. Furthermore, the producer price index rose a hot 0.7% month-on-month in January, up from analyst expectations of 0.4% and a reversal of the 0.5% decline seen in December. The core PPI was up 5.4% year-on-year in January, down from 5.5% in December, but much hotter than the 5.0% expected by analysts. Furthermore, the core PPI was up 0.5% month-on-month in January, beating analyst estimates of 0.3%, and much hotter than the 0.1% gains seen in December. That combines with the CPI data out on Tuesday to show that inflation is rearing its head once again. We should get more inflation data before the Federal Reserve meets again next month, but this data raises concerns that the Fed will have to do what it has been saying that it must do, and that is to take rates higher and for longer than the market has anticipated.

First-time claims for unemployment benefits dropped to 194K in the week ending February 11, down from 195K the previous week and down from analyst expectations of 200K. The four-week moving average rose slightly this week to 189.5K claims, up from 189.0K claims the previous week. Continuing claims for the week ending February 4 rose another 16K to 1.696 million. This number is still relatively low from a historical perspective, but it continues to trend higher, giving us one of the few clues out there that tighter monetary policy is starting to work toward easing wage inflation, among the many other signals suggesting that more needs to be done. The Philadelphia Fed manufacturing index for February is -24.3, versus -8.9 the previous month, showing ongoing recession in the manufacturing sector, unlike the improvement seen this week in the New York Fed district. Other data showed that January housing starts fell to an annualized rate of 1.309 million, down from 1.371 million the previous month and below expectations of 1.365 million. Permits for new starts came in at an annualized rate of 1.339 million, up slightly from 1.337 million the previous month, but below expectations of 1.350 million. The above factors limited losses on Wall Street thus far, as they suggest that the Fed does not need to get more aggressive than it currently is in its policy. Even so, the tone remains weaker on expectations that we have more 25-basis-point rate hikes to go.

It’s day #358 in the Ukraine war, and the fighting is perhaps as intense as at any point in the war. Russia launched another attack on Ukraine’s critical infrastructure today, firing at least 36 missiles into the country. Ukraine claims that it shot down 16 of the incoming missiles, but significant damage was still done. Nonetheless, Ukraine states that no additional loss of power resulted from the attack. Tensions are also rising along the Ukraine border with Belarus, which is an ally of Russian President Putin. Belarus’ president states that they will not send troops into Ukraine unless they are attacked, but that sounds a lot like lines we heard from Russia prior to its invasion last year. Russia continues to slow-walk inspections of ships moving toward the Ukrainian ports near Odessa, allowing just 16 ships to arrive at ports as part of the grain initiative last week. Ukraine continues to call for the United Nations to force Russia to cooperate with the inspections. The conflict raises some questions whether the initiative will be extended beyond March 19, although U.N. authorities insist that it will. Regardless, the flow of grain out of Ukraine is slowing.

Grain and oilseed prices are influenced more by recession worries this week than they are individual supply and demand fundamentals. They could still rally in this environment, but they need a stronger story to do so, and that story is lacking currently. Headlines of drought damage in Argentina are growing stale, and harvest pressure is increasing in Brazil, where storage is in short supply for this big crop, pushing bushels onto the market. Brazil’s crop is massive. Rains may be slowing harvest progress, but it is not stopping it. Sufficient bushels are being harvested to keep the flow of soybeans to the ports moving, with ships being loaded. The soymeal market, which is believed to have large speculative ownership, is testing their willingness to hold onto those long positions currently. The bulls are being tested in the soybean complex this week.

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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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Energy
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Cocoa
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Mike CastleThu, 06 Aug 2026, 13:24

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
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August 5 – The Dow Jones is ripping higher for yet another session, up safely over 500 points at the time of this writing to carve out another record high; the S&P and NASDAQ are a bit less enthusiastic but the former is still making its own record high, while the latter is less than 500 points off its own top thanks to a strong ongoing week of trade. The dollar is churning lower this morning in an effort to re-test Monday’s 1 ½-month low, while the ten-year note has flipped higher in the mid-morning hours. The CME FedWatch tool interesting has market odds of a quarter-point rate hike next month coming closer to a 50-50 proposition as crude oil prices decline.

Mike CastleWed, 05 Aug 2026, 15:19

Grains & Oilseeds

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