Perspective: Morning Commentary for July 1

By: Arlan Suderman, Chief Commodities Economist

Fri, 01 Jul 2022, 13:19

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

July 1 – Stocks again have a negative tone to them going into a three-day holiday weekend. Worries about inflation and the economy’s ability to withstand the medicine from the Federal Reserve needed to tame inflation continues to haunt traders, although the market has already priced in a great deal of risk. Nonetheless, traders tend to get nervous when approaching a three-day holiday weekend amid so much uncertainty, when headlines continue while the markets are closed. The markets will be closed for Independence Day on Monday. The VIX is trading near 28 this morning, reflecting easing, but still elevated, fears on Wall Street. The dollar index is just below 19-year highs as it trades near 105.4. Yields on 10-year Treasuries are trading near 2.87%, as money quietly flows into safe-haven assets. Crude oil is bouncing roughly 3% this morning after finding some support recently near $100 per barrel. The Ags are mixed following a big sell-off yesterday that suggested that recent weakness there is more about macro recessionary fears than it is about fundamentals, which may remain the case until/unless the fundamentals become strong enough to prove traders wrong.

Monday is Independence Day in America. How far we’ve come as a nation. This nation was founded by risk takers. Farmers and businesspeople who valued independence and self-governing based on hard work, faith, and integrity. The easy way out would have been to “go with the flow” and let the British deal with the problems facing the colonies. Yet, they valued freedom enough to risk their lives and their livelihoods to make it happen. They understood that nothing great comes without sacrifice, and a lot of hard work. They were not afraid of adversity, but rather embraced the good that could come from it. They understood that leadership meant finding common ground for the good of the new nation and fighting side-by-side for that good, rather than fighting each other.

President Xi Jinping traveled to Hong Kong today to personally help install the new leader that will ensure that the business hub will serve under the wishes and sovereign control of Beijing. Specifically, Xi Jinping stated that the leadership power in Hong Kong was firmly in the hands of “patriots.” He also emphasized that Hong Kong will successfully move forward under the “one country, two systems” philosophy under Beijing’s jurisdiction. That’s seen by some as code directed at Xi Jinping’s intentions for Taiwan as well. I put China’s efforts to “reunify” Taiwan on my list of possible black swan events that could impact the commodity markets in the spring of 2021, along with a possible Russian invasion of Ukraine. The latter happened, while the former still has not. I do not know if it will happen, but I can say that we are at greater risk of it happening now than we were then. And I believe that the risks for it happening sooner rather than later have escalated as well.

President Xi Jinping has repeatedly indicated that he is committed to “reunifying” Taiwan to China. He’s closely monitored developments in Ukraine, and how the world has responded. Russia is a major exporter of food and energy, while China is a major importer. Russia’s failure to quickly accomplish the takeover resulted in growing sympathy for Ukraine from the West, along with an increase in military assistance. A successful takeover of Taiwan must be quick and efficient; not giving the West time to develop sympathy for the island nation, nor to build up a military defense. China has been building up an arsenal of military equipment designed for an amphibious assault. It’s also been investing in infrastructure and relationships with “friendly” countries who can supply it with food and energy. President Xi Jinping hosted a BRIC conference last week that received very little media attention, attended by Russian President Putin, as well as leaders from Brazil and India. These nations took steps to strengthen their ties in light of the Ukrainian war, to open up trade while supporting one another’s needs. Meanwhile, China has been holding military exercises across the Straits from Taiwan, while also naming a new aircraft carrier after the province across from Taiwan. This is slowly becoming a risk on the horizon that must be respected.

USDA’s lower soybean acreage estimate on Thursday was a game-changer for the balance sheet, wiping out over 150 million bushels of production potential. Yet, soybean prices followed corn, wheat, and most of the rest of the commodity and equity sectors lower. Yes, it was the end of the month and end of the fiscal quarter. But yesterday’s action also spoke volumes about the power of money flow driven by computers following macro-economic and technical chart signals. Yesterday’s trade had more to do with Wall Street’s recession fears than it did current grain and oilseed supply and demand fundamentals, and it’s possible that will remain the case until / unless the fundamentals do something to shock the market into a different mode. Weather the next 30 days has the best opportunity to do that. Will it do so? Time will tell. The next week or so should see good rains across much of the Midwest. Beyond that, the models suggest that we will go through a period of hot dry weather for the Midwest, before possibly shifting into a milder dry-leaning period. The length of the hot dry stretch will likely determine if supplies are threatened or not. Fundamentally, weather is not the main issue. But it has to prove threatening for the market to look beyond its current recession fears, and that’s yet to be determined.

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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Perspective: Morning Commentary for August 5

August 5 – U.S. equities markets are on fire this week, with both the Dow Jones and S&P 500 setting new all-time highs yesterday with futures indicating further gains again today; the marketplace remains optimistic over a deal with Iran despite no evidence of such as of yet. Crude oil is working on a lower high and low today but remains slightly on the high side on the session, while the dollar is retreating back towards Monday’s nearly two-month low. The ten-year note is steady-to-lower this morning (though solidly lower so far this month) at 4.605%, while the VIX index continues to rebound into mid-week at almost a 17-point reading this morning.

Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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