Perspective: Morning Commentary for March 2

By: Arlan Suderman, Chief Commodities Economist

Thu, 02 Mar 2023, 14:41

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 2 – Stocks came under pressure again this morning as another round of data raised fears again on Wall Street that the Federal Reserve may have scaled down its monetary tightening too soon. The VIX is trading back above 21 this morning, which doesn’t reflect any sense of panic on Wall Street, but it does suggest that fear levels are a bit higher following the data release. The dollar index is notably higher near 105.0 in early trade as it follows Treasury yields higher. Yields on 10-year Treasuries are trading near 4.07%, after breaking through the 4.0% barrier yesterday, while yields on 2-year Treasuries are trading near a 15-year high of 4.93%. Crude oil prices are modestly higher, while the grain and oilseed markets traded mixed to higher overnight.

Nonfarm productivity grew at an annualized rate of 1.7% in the fourth quarter of 2022, down sharply from the 3.0% originally reported last month, and well-below the 2.5% anticipated by analysts. Unit labor costs therefore soared to a 3.2% growth rate, which was nearly three-times the 1.1% growth rate originally reported, and more than twice the 1.4% anticipated by analysts. This suggests that wage inflation is not only due to the direct impact of higher salaries, but also due to lower productivity, requiring more worker hours to accomplish the same task.

First-time claims for unemployment benefits totaled 190K in the week ending February 25, down from 192K the previous week, and below analyst expectations of 200K claims. Even so, the four-week moving average climbed to 193K claims, up from 191.25K the previous week. Continuing claims for the week ending February 18 totaled 1.655 million, down another 5K from the previous week. Today’s data suggests an even tighter jobs market, despite the headlines telling of layoffs by tech firms and others. The data suggests that people being laid off are finding new positions relatively quickly, keeping the labor market extremely tight. This too argues for the Federal Reserve to maintain its path toward monetary tightening, if not even perhaps ratcheting back up a bit again.

The next policy statement from the Federal Open Market Committee is scheduled for March 22^nd. Fed Fund futures trading currently places 69% odds of another 25-basis rate hike, with 31% odds of a 50-basis point rate hike. Fed fund futures are now pricing in expectations of peak rates north of 5.50% later this year as Wall Street adjusts to the reality that the Fed’s work to this point has still not done much to deal with the strong inflationary pressures in the service and shelter sectors, with the service sector issues largely tied to wage inflation problems. Recent data has some traders debating whether the Fed has again lost credibility by taking its foot off the gas pedal of monetary tightening too quickly by backing off from its 75-basis point rate hike pace it maintained for much of the last half of 2022? Does that mean that the Fed may ratchet the pace back up to perhaps 50 basis points for a meeting or two, or will it maintain its current pace of 25-basis points for several more meetings? Regardless, Wall Street worries about the pain that those rate hikes might cause to the U.S. economy, maintaining headwinds for the stock market and creating demand worries within the commodity sector.

Big crops get bigger and small crops get smaller. StoneX Brazil raised its corn and soybean production estimates to 130.61 and 154.66 million metric tons respectively, based on their latest customer survey, up from 129.88 and 154.2 mmt respectively the previous month. Drought problems are notable in southern Brazil but yields on the northern belt – particularly the Center-West region – are so impressive that they are more than offsetting the losses in the south. Harvest progress is slower than producers would like to see, which is pushing back planting of the safrinha corn crop. That increases risks for the safrinha crop, particularly in Mato Grosso do Sul and Parana. The risk in Parana to late-planted corn would be that of a possible early frost, whereas an early onset of the dry season would be the bigger concern for late-planted corn in Mato Grosso do Sul. Those crops may end of fine if the weather cooperates. It just means that the risks are higher this year.

Meanwhile, Argentina’s crops continue to get smaller. USDA currently has Argentina’s corn crop at 47 mmt, down from 55 mmt previously, but it will likely end up in the low 40s. USDA has the Argentine soybean crop at 41 mmt, down roughly 10 mmt from its original estimate, but it may still be 10 mmt too high. Brazil has the excess soybeans and crush capacity to fill the deficit created by the drought-shortened crop in Argentina, but it will all be about the margins. Argentine crush margins must remain high enough – elevated meal prices – to pay the freight to import soybeans, while Brazilian crushers will be competing with exporters for supplies.

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Perspective: Morning Commentary for August 12

August 12 – Today’s focus is on inflation, with the July consumer price index data out this morning. We have this, and one more month of data, ahead of the next Federal Reserve meeting. Of course, headlines from the Middle East and the Black Sea wars also have an ongoing influence on the markets. Stock futures posted gains this morning, while the VIX traded just below 15. The dollar index traded near 99.7. Yields on 10-year Treasuries are trading near 4.66%, while yields on 2-year Treasuries are trading near 4.18%. WTI crude oil is trading near $83, while Brent trades near $88 per barrel. The grain and oilseed markets rebounded from yesterday’s losses ahead of today’s highly anticipated WASDE crop report that is due out at Noon Eastern Time.

Arlan SudermanWed, 12 Aug 2026, 13:33

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
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Forest Products

Perspective: Morning Commentary for August 11

August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.

Arlan SudermanTue, 11 Aug 2026, 13:21

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
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Forest Products

Perspective: Mid-Day Commentary for August 10

August 10 - Stocks traded quietly mixed to weaker through much of the morning as investors weigh Middle East war / peace headlines with artificial intelligence concerns / opportunities. Ironically, the VIX is trading near 15, putting it just barely above 2026 lows, despite the high level of geopolitical risks and AI concerns. The dollar index continues to consolidate largely between 99.5 and 100.0 after the late July break in what appeared to be Japanese central bank currency intervention. Yields on 10-year Treasuries are trading near 4.70%, while yields on 2-year Treasuries are trading near 4.24%. WTI crude oil is trading near $81 at this hour, while Brent trades near $87 per barrel on the geopolitical risks. The grain and oilseed markets are mixed ahead of Wednesday's big USDA WASDE crop report.

Arlan SudermanMon, 10 Aug 2026, 17:02

Grains & Oilseeds

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