Perspective: Morning Commentary for July 13

By: Arlan Suderman, Chief Commodities Economist

Wed, 13 Jul 2022, 13:29

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

July 13 – Inflation again made headlines this morning, following the release of the June consumer price index data. That set the tone then for tomorrow’s producer price index, followed by retail sales data to be released on Friday. Those three data sets provide the backdrop of Wall Street sentiment ahead of the Federal Reserve’s next policy meeting in two weeks. The VIX is trading near 28 this morning, reflecting elevated fear levels on Wall Street. The dollar index is trading just below yesterday’s 19-year high, currently near 108.3. Yields on 10-year Treasuries are trading near 3.04%, with some money still flowing toward the safe-have assets. Crude oil prices are modestly lower, after falling to a fresh three-month low overnight. The Ags are mixed in consolidation trade as traders assess weather risks in the Midwest ahead of the critical reproductive growth phase for the nation’s corn and soybean crops, and as they follow progress in talks over opening up Ukrainian ports for export shipments. Commodity prices generally dropped as the inflation data hit.

The June CPI hit a new 41-year high at 9.1%, up from 8.6% the previous month, and exceeding analyst expectations of 8.8%. Inflation at the consumer level hit 1.3% month-on-month in June, up from 1.0% in May and exceeding analyst expectations of 1.1% gains. Maintaining that rate would result in double-digit inflation. Hopefully, that won’t happen. The core CPI that excludes the more volatile food and energy sectors rose 0.7% month-on-month in June, up from 0.6% in May and exceeding analyst expectations of 0.5%. So, you can blame rapidly rising energy prices in June, but inflation continued to rise, even when energy was excluded from the calculation. The core CPI rose 5.9% year-on-year in June, down slightly from the 6.0% seen in May, but up from analyst expectations of 5.8%. Energy prices actually peaked on June 14^th – trending sharply lower into late-month. That trend toward lower energy prices continues to this day as consumers who are worried about the economy cut back on driving, and as China sees widespread restrictions to its economy due to Covid-19.

There’s no doubt that energy is a big driver in the inflation battle. The sector as a whole is up 41.6% year-on-year, with gasoline prices up 59.9%, fuel oil up 98.5%, natural gas up 38.4%, and electricity up 13.7%. High energy prices funnel into nearly everything that we do and/or purchase – from the trucks that haul products to the packaging around those products. Food prices are up 10.4% year-on-year, with food purchased for consumption at home up 12.2% year-on-year, and food purchased for consumption away from home up 7.7%. New vehicle prices are up 11.4% year-on-year, while used vehicle prices are up 7.1%. Transportation is up 8.8%, while shelter is up 5.6%. It currently looks like we will see a pullback in the energy numbers when the July CPI numbers come out next month, but that appears to be the product of Covid in China and a struggling economy here in the United States. Those are not good reasons to see energy prices coming down, as they say something about the systemic problems in the economy. Those systemic problems are very real, and they must be dealt with to restore health once again.

China reported 57 new locally transmitted Covid-19 cases on Tuesday, along with 2014 asymptomatic cases, according to today’s edition of China Direct, published by our Shanghai office. Numbers outside of quarantine zones are in decline, suggesting that China is beginning to get control of this latest outbreak of Covid-19, but at what cost? China will celebrate its ability to be the master over Covid-19, but it’s paid a steep price for doing so. That cost is easily seen in the economic data, but there’s also been a steep price paid by its citizens. Daily testing is a way of life for many people living in China, along with the feeling that you never know when your phone will notify you that you must report to a government quarantine center. New variants of Covid will continue to seek to defeat China’s zero-tolerance system, so the lockdowns and restrictions are expected to continue to hamper China’s economy. This is expected to continue until at least this fall when China’s Congress convenes to reappoint President Xi Jinping for another four-year term.

The dollar and the euro are on par for the first time since 2002, hurting our competitiveness on the world market. The VIX is trading just below 30. Both of the above create headwinds for the broader commodity sector. Yet, grain and oilseed traders are also closely following weather forecasts for the U.S. Ag Belt as the nation’s corn and soybean crops enter the critical reproductive phases. Intense heat is building in the Plains, which is expected to periodically pulsate deeper into the Midwest over the next several weeks. An overall trend of below normal rainfall is also expected across most of the Ag Belt over the next several weeks, with moisture relief primarily limited to ridge-running storm clusters coming up and over the high pressure. These systems are expected to provide hit and miss moisture opportunities. My agronomy training tells me that it will be difficult to achieve trend yields if this forecast verifies, but the scope of the impact on yields will hinge on the frequency, coverage, and placement of those ridge-running storm clusters. The opportunity is there to significantly tighten the balance sheets in the weeks ahead, but it all comes down to how the forecasts verify. Meanwhile, the market will trade this within the context of fear on Wall Street remaining elevated due to the aforementioned risks of inflation and the Fed.

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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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Perspective: Mid-Day Commentary for August 6

August 6 – Stocks remain quietly mixed at midday as both the S&P 500 and Dow Jones remain just below their fresh all-time highs put in yesterday. This is allowing the VIX to cool to a four-week low below the 15.4 mark, reflecting the collective sigh of relief in the market amid largely better than expected U.S. economic data today. The dollar remains quietly in the green in its relatively tight range this week, trading at 99.9 at the time of writing. Treasuries remain elevated but have cooled from their recent peaks, with 30-year yields trading at 5.189%, 10-year yields trading at 4.647%, and 2-year yields trading at 4.229% at midday. Crude oil also remains quietly in the green, with nearby WTI up 2.3% on the day trading near $76.80 and nearby Brent up 2.4% on the day trading near $81.40. The ags remain mixed, with the wheat complex now squarely in the red while corn and soybeans cling to small gains, and the livestock complex largely pushes lower.

Mike CastleThu, 06 Aug 2026, 15:18

Grains & Oilseeds

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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