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Perspective: Morning Commentary for March 24

By: Arlan Suderman, Chief Commodities Economist

Perspective: Morning Commentary
 
Matt Zeller
Senior Market Intelligence Analyst
Matt.Zeller@StoneX.com

March 24 – Banking fears are back this morning with Deutsche Bank shares down around 11% in pre-market trade, after their credit default swaps spiked unexpectedly; no story has yet accompanied the move but the trade doesn’t need much to cause anxiety at this point. The UBS acquisition of Credit Suisse earlier this month has the European banking industry under scrutiny. Dow Jones futures are down over 300 points at the time of this writing, following a volatile session yesterday, though action has mixed and up-and-down overall across the last two weeks. The VIX is on the rise into the end of the week, trading above 24 this morning, but still below higher-volatility periods in mid-March. U.S. treasuries are benefitting from the Federal Reserve rate increases, followed by European central bank rate hikes as well, and speculative money flow is clearly heading into that area and away from commodities.

 

Durable goods orders fell 1.0% in February, well below the average trade estimate that was looking for a 0.2% monthly increase; January orders were revised lower from -4.5% to -5.0% as well. Durables excluding transportation were unchanged on the month, while orders placed with factories for business equipment rose slightly in each of the last two months. Still, the gradual slowdown in the overall figure suggests that the last year of interest rate hikes and rising economic uncertainty could be starting to curb overall investment plans. Manufacturing PMI numbers for March are on the way later this morning but that’s about it for economic data heading into the weekend.

 

The grain markets are mixed this morning with the soybean complex anchoring the proceedings; soybeans and meal are the last holdouts with substantial spec fund longs to be liquidated, and they are taking historic beatings in recent sessions. November soybeans are working on a 14th straight losing session with the nearby contracts not faring much better. Conversely, wheat is rallying off lows today on an interesting report in a Russian newspaper saying that their government “could recommend” a temporary halt in wheat and sunflower exports. The country’s Ag Ministry will reportedly meet with industry representatives this week and discuss the proposition. The grain trade was temporarily soothed when Russia agreed to an extension of the Black Sea export deal last week, but the shorter term and Russian rhetoric during negotiations left plenty of questions yet to be answered. This could be Russia’s next move, or at least yet another continued threat to appear on the offensive side of the situation. Corn continues to be held up by decent basis levels (and farmers sitting on stocks), aided by a run of daily flash sales to China as well. Another 8+ million bushel sale this morning brings purchases to 108 mbu over the last ten days.

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