Perspective: Morning Commentary for March 18

By: Arlan Suderman, Chief Commodities Economist

Fri, 18 Mar 2022, 13:32

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 18 – It’s Friday on Wall Street. Traders understand that the headlines will continue to flow out of Ukraine through the weekend, while the markets will not be open to trade them. As such, Fridays have become a time for assessing risk exposure. I don’t expect that we’ll see it to the same extent as we have in past Fridays during this war, as Wall Street is increasingly coming to accept that this war is going to linger. Yet, traders will be watching today for any signs that we could see a shift in momentum over the weekend. The VIX is trading near 26 this morning, after dipping to a four-week low just above 25 on Thursday. The dollar index is trading near 98.6, while yields on 10-year Treasuries are trading near 2.17%. Short-term rates have been pricing in expectations for more rate hikes coming through the year, while the medium and longer-term rates reflect a more cautious approach, as traders worry about the longer-term adverse impacts of a slowing economy. Crude oil prices saw follow through buying overnight after prices rose back above $100 per barrel on Thursday, while the Ags were quietly mixed to lower overnight, with lingering strength in the soybean complex.

Some creditors report that they have received dollar-denominated payments for Russian bond coupons that were due this week, averting for now a default on the debt obligations. Russia desperately wants to avoid being considered a nation that defaulted on its debt, but the sanctions placed on it due to its invasion of Ukraine make that increasingly difficult. The above payments were made to cover $117 million in coupon payments due this week, while another $615 million are due over the remainder of the month. Reuters reports that the first principal payments are due April 4 when a $2 billion bond matures. Meanwhile, Russia shows few signs of letting up as it continues to do its best to pound Ukraine into submission, with some observers now fearing that Putin will resort to chemical weapons or worse to be sure that he wins this war.

China reported 2,388 new locally transmitted Covid cases yesterday, which is a sharp increase from the previous day, reflecting the continued spread of Omicron despite China’s vast lockdowns and restrictions. The cases are most concentrated in Jilin Province, but they are spread across China, further complicating efforts by authorities to contain the Omicron variant. Some large companies have been allowed to create bubble environments where workers live so that they can continue to work, but many sectors of China’s economy remain totally shutdown, other than “essential services.” That dramatically decreases China’s consumption of energy, while also inflicting damage on its stagnating economy. China’s official economic data does not reflect the stagnation, but that data simply does not fit with reality in the view of an increasing number of observers. China had been using hospitals to quarantine people who tested positive for Covid, but they are now constructing other facilities to do that to free hospitals to care for those most in need. The fear is that the spread of Omicron could tax China’s healthcare system, particularly in some of the less developed areas of the country.

Food security is a high priority for the Chinese government amid the rising geopolitical risks in the world, combined with weather risks. China is very dependent on imports of soybeans for its food security, while also somewhat dependent on imports of corn, wheat, meat, and other commodities. But its primary dependency is on soybean imports, with much of that dependency tying it to the United States, which it sees as a greater risk based on its observations of sanctions implemented by the West against Russia in recent weeks. As such, we’ve recently heard comments out of China how it could curtail consumption of soybeans by 30 million metric tons – a figure eerily close to the volume of soybeans it was expected to import from the United States this year. The issue rose even further to the forefront when severe drought hit South America this year, with current production losses estimated to be nearly 35 mmt. China fears that shortfall gives too much leverage to the United States. As such, increasing soybean production is a priority. It is prioritizing inter-planting of soybeans in corn fields to increase production, along with reclaiming some high salinity land, and shifting area away from other crops, such as rice and corn. It’s targeting an increase of 20 million mu of planted soybean area this year, which would be an increase of 3.3 million acres or 14% growth in area from the previous year. The bottom line is that China continues to move toward less dependency on commodities originating from the United States.

The Federal Reserve is not doing enough to battle inflation, in the view of St. Louis Federal Reserve President James Bullard. He voted against this week’s statement released by the Fed, believing that the central bank needs to move its overnight lending rate above 3% this year to catch up with inflation. That general expectation that inflation will remain a significant problem going forward continues to pull money into the commodity sector, which historically has meant that the market manages supply and demand at a higher level. Drought in South America, fertilizer shortages, and the Ukraine war combined to dramatically tighten grain and oilseed supplies this year, with a growing list of world leaders now sounding the warning that we could see food shortages stretch from Pakistan across to North Africa over the next 12 – 18 months. This will make a large safrinha corn crop in Brazil, followed by a large Midwest crop, essential this year, with Ukrainian production expected to be severely curtailed. There is very little margin for error over the coming year.

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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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