Perspective: Morning Commentary for June 14

By: Arlan Suderman, Chief Commodities Economist

Tue, 14 Jun 2022, 13:47

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

June 14 – Inflation and the Fed are again the focus today. Traders responded positively to this morning’s data on inflation at the producer level, but they remain wary of how the Federal Reserve may respond when it releases its updated monetary policy statement tomorrow afternoon. Yet, stocks continue to bounce this morning following Monday’s collapse, allowing the VIX to ease back from yesterday’s five-week high at 35 to trade near 34. The dollar index is trading near 105.1, after hitting a fresh 19-year high near 105.3 on Monday. Yields on 10-year Treasuries are trading near 3.34%, down from yesterday’s 11-year high of 3.44%. Crude oil prices are 1% higher this morning, while the Ags were mixed overnight.

The producer price index rose 0.8% month-on-month in May, matching analyst expectations, but up from 0.4% the previous month. The PPI rose 10.8% year-on-year in May, down from analyst expectations of 11.0%, but part of that was due to a large upward revision of the April number to 11.5%, up from 11.0% originally. The core PPI that excludes the more volatile food and energy sectors rose 0.7% month-on-month, exceeding analyst expectations of 0.6%, even as the April number was raised from 0.4% to 1.1%. The core PPI was up 9.7% year-on-year in May, which was a full point above analyst expectations of 8.7%. The April number was revised to 10.0% year-on-year, up from the 8.8% originally reported. Those were unusually large upward revisions for April, but yet the May numbers still posted strong gains against those April numbers. Yet, because the April numbers were revised so high, it gave the appearance that inflation was starting to moderate in May, resulting in a modest positive reaction by Wall Street.

The Federal Reserve starts two days of debate today, and I would certainly love to be able to listen in to that discussion. There is no clear path out of this mess for the Fed. There’s no precedent to follow, and there are many variables outside of its control. The Fed told us to be patient for far too long because it had everything under control when that hasn’t been the case at all. It would have been better off acting much sooner to tame inflation, knowing that there were factors out of its control, to reduce the risk of those factors garnering momentum. No, I can’t fault them for not anticipating the Russian invasion of Ukraine, even though I had it on my list of black swan events a year ago. But they should have recognized that as a possibility. Even so, inflation got out of hand long before Putin made his move into Ukraine. Why do I bring this up? Because the lack of a clear path likely will lead to some lively debate within the board room the next two days as the Federal Open Market Committee discusses its next move. Yet, its final printed and verbal statements need to reflect confidence that it has everything under control, which won’t be an easy feat. Failure to do so could lead to more market volatility.

Spring planting is complete in Ukraine, and the spring harvest has begun. The total area of this year’s planted spring crops was reduced by more than 20% due to the war, while the mix of those crops changed as well. Farmers factored in the cost of production in deciding which crops to plant, as well as availability of crop inputs, and the ability to sell those crops on the domestic market, with exports remaining limited. The area planted to corn fell to 4.6 million hectares, down from 5.5 million hectares last year. The area planted to spring wheat rose from 42K hectares last year to 200K hectares this year. Soybean area remained essentially unchanged at 1.25 million hectares, down slightly from 1.3 million hectares in 2021. Sunflowers were planted on 4.7 million hectares, which is roughly the same as the previous year. Ukraine expects to harvest 48 – 50 million metric tons of grain this year, with wheat reaching 18 – 20 mmt, soybeans 2.5 – 2.8 mmt, sunflowers 10 mmt, barley 5 mmt, and corn 24 mmt. However, exports are expected to remain constricted. Significant efforts have been made to increase the capacity of Ukraine to export grain over land across its western border. But it has thus far been unable to push exports much over 1.1 mmt per month. That number is expected to drop over the next several months as Eastern Europe prioritizes its own harvest for its infrastructure, leaving less room to move Ukraine exports. Someday that build up of Ukrainian supplies will hit the world market, but that someday unfortunately currently looks a long way down the road.

It’s heating up and drying out across the Midwest this week. A surge of heat is expected to bring record readings this week, before moderating over the weekend, followed by another surge in heat next week. For most, the heat units will be positive for the crops, until the moisture runs out. The primary question is, will the current pattern hold into and through next month? Forecast models disagree on that currently, but for now, the pattern is hot and dry. That has traders nervous in a year when the margin for error is essentially nonexistent.

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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

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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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