Perspective: Morning Commentary for March 27

By: Arlan Suderman, Chief Commodities Economist

Mon, 27 Mar 2023, 13:11

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 27 – Stock futures firmed overnight following an announced deal that sees Silicon Valley Bank purchased by First Citizens BancShares, Inc. That eases concerns of contagion for now, allowing a bit of money to flow back into many of the commodity and equity markets. The VIX is trading near 21 this morning, while the dollar index is trading near 103.1. Yields on 10-year Treasuries are trading near 3.49%, while yields on 2-year Treasuries are trading near 3.95%. Crude oil prices are 1% higher, while the grain and oilseed markets were mixed overnight.

Bank shares stabilized overnight, easing concerns on Wall Street, following the takeover of Silicon Valley Bank by First Citizens over the weekend. Reuters reports that First Citizens BancShares bought all of SVB’s loans and deposits, while giving the Federal Deposit Insurance Corporation equity rights in its stock worth as much as $500 million in return. It appears that First Citizens also has an agreement with regulators to share losses to provide further protection against potential credit losses. Nonetheless, SVB’s failure is expected to cost the FDIC roughly $20 billion, which the rest of us will eventually pay in higher fees, etc. There’s a cost to the bank failures – many of which were the product of poor decisions. But there’s a bigger cost to be paid by the erosion of confidence in the nation’s banking system. Investors hope that the recent actions by regulators have come a long way toward reinstating confidence in the banking system, although we still likely have some bumpy times ahead.

This week’s focus should shift to comments from members of the Federal Open Market Committee – the policy making arm of the Federal Reserve. No less than six public speeches by members of the FOMC are on the schedule this week, and they will surely all be asked about the health of the U.S. banking system, and the implications of the current instability for monetary policy. The Fed stated at its last meeting that it planned to raise rates at least one or two more times this year, and that it was unlikely to consider any cuts before next year. The market – sticking to its skepticism – is pricing in just 35% odds of a rate hike on May 3^rd, with just 28% odds of seeing one in June, while expecting the first rate cut to come as early as July. In fact, the market is pricing in 75 to 100 basis points of cuts by the end of this year. Keep in mind that the market has been wrong about the Fed for the past year, but the strength of its conviction continues to grow. That means that the Fed will either yield to the market’s expectations, or that the market will once again be disappointed and need to adjust.

China’s industrial profits contracted by 22.9% in the first two months of this year, according to today’s edition of China Direct, published by our Shanghai office. That was well below market expectations of a 5% contraction. As one would expect, state-owned companies performed better than private companies, according to China’s National Bureau of Statistics, showing just a 17.5% decline in profits during the two-month period, while private companies saw a decline of 19.9% and foreign companies saw a decline of 35.7%. Today’s reported numbers do not speak well for a rebound of China’s economy following Covid. On a related matter, The Chinese government just completed its annual high-level three-day economic forum, which allowed top foreign executives to have closed door meetings with China’s new premier, Li Qiang. Top U.S. executives from Apple and Proctor and Gamble attended, but the overall size of the U.S. business delegation was notably smaller this year, even though this was the first year post-Covid for the conference. That suggests that U.S. businesses are reassessing business opportunities in China, which is not a good sign for China’s economic outlook.

The commodity markets will continue to be vulnerable to headline risk this week, although those seemed to have calmed down to start the week. Wall Street continues to be very sensitive to signs of bank vulnerability in the current rising interest rate environment. Those factors that impact money flow will always be a risk for the commodity markets in a world of Algos and massive fund investment. However, this is also a week that frequently focuses the trade on supply and demand fundamentals for the spring. USDA will release the results of two significant surveys on Friday. The first will reveal farmer planting intentions for the coming growing season. That triggers the switch toward focusing on spring planting prospects to see if farmers will actually be able to plant those intentions. Two areas to watch will be the northwestern Corn Belt, where the snowpack remains deep, and the Mid-South, where rains have slowed early fieldwork. The second survey will reveal all grain stocks in storage as of March 1^st. This report is known for its market-moving surprises – especially for corn – with implications for feed usage trends. Look for the market to slowly increase its focus on Midwest weather patterns as we move beyond Friday’s reports.

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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
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Renewable Fuels
Cocoa
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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

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Renewable Fuels
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Perspective: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

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Renewable Fuels
Cocoa
Coffee
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Forest Products

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