Perspective: Morning Commentary for March 6

By: Arlan Suderman, Chief Commodities Economist

Mon, 06 Mar 2023, 14:24

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 6 – Stock futures traded quietly firmer overnight as Wall Street focuses on a plethora of jobs data to be released this week, as well as a couple of Congressional appearances by Federal Reserve Chair Jerome Powell. However, commodity prices came under pressure as China released less-robust growth objectives than anticipated for the year, raising concerns about demand in the year ahead. The VIX is trading near 19 this morning, while the dollar index is trading near 104.5 to start the week. Yields on 10-year Treasuries are trading near 3.92% this morning, after failing to hold above 4% last week, while yields on 2-year Treasuries are trading near 4.84%, as this inversion continues to widen. Crude oil prices are down roughly 1% in early trade, while the grain and oilseed markets came under pressure overnight as well, led by a technical failure of Chicago and Kansas City wheat prices on the charts.

Fed Chair Jerome Powell is scheduled to testify before the U.S. Senate Banking Committee on Tuesday, and then again before the House Financial Services Committee on Wednesday. He is expected to get grilled on the central banks’ intentions to continue raising interest rates, and its corresponding handling of the nation’s inflation problems. Traders will be parsing his words closely for signs that the central bank may be considering pivoting its policy this year, although they’ll also be watching for signs that it may be considering getting more aggressive in its tightening once again. We could very well see a week of headlines driving market action in the equities and in the commodities this week, with the commodity markets focused more on the macroeconomic picture than their actual supply and demand fundamentals.

Jobs will be a key focus this week. We’re scheduled to get monthly private sector jobs data from ADP on Wednesday morning, followed by weekly jobless claims data on Thursday, and the government’s monthly jobs data on Friday morning. The employment sector is the primary focus in the inflation battle currently, with prices still rising in the service sector, largely due to ongoing wage inflation that shows few signs of letting up. Shelter prices are also still hot, but that sector is expected to see some improvement in the months ahead. Nonetheless, the Federal Reserve will need to bring wage inflation under control if it is going to stay committed to its 2% inflation mandate, and that means more pain for the economy. It’s going to be difficult to avoid that pain if they stick to the 2% commitment.

China announced a 5% growth target for its economy over the weekend, which came in at the bottom end of market expectations. That was disappointing to traders, but it likely reflects concerns about sluggish export demand due to the slow growth currently seen for Europe and for the United States. It also reflects some of the internal growth problems seen within China following three years of Covid-related restrictions and lockdowns. On a related note, China notes that its sow herd contracted by 0.05% in January to 43.67 million head, which is reflective of sluggish demand and poor feeding margins in the country, and the first contraction in the breeding herd since May 2021. That suggests slowing demand for corn and soymeal into the summer, although it is possible that we could still see China increase purchases on the world market to rebuild its reserve inventories during this time of slower demand. We should also note that China shifted to a softer tone in its comments toward Taiwan over the weekend. It’s official statement spoke of Beijing’s resolute steps to oppose Taiwan’s independence while promoting reunification. However, the tone was softer as Taiwan moves toward its presidential elections early next year, perhaps to reduce making reunification a hot election issue on the island nation. Recent public opinion polls in Taiwan shifted towards peace and were less supportive of provocative measures toward the mainland, and China likely wants to foster that shift in rhetoric going forward.

La Nina is essentially dead. The waters of the equatorial Pacific have been abnormally cool for the past three years, giving us an extended La Nina weather pattern. However, the easterly trade winds have eased in the region, allowing the waters to warm into neutral territory. The European forecast model projected an aggressive shift toward a warm El Nino pattern by the end of the spring over the weekend. That would suggest increased risks for drought in the Australia and South Africa growing seasons, but generally reduced risks for drought in primary growing areas of North and South America. Forecasters generally expected us to move toward an El Nino pattern this year, but the question has been over the timing of the El Nino development. The weekend European forecast is one of the more aggressive to date, although confidence tends to be lower in ENSO forecast models in the spring months, when they their accuracy tends to struggle more. The models simply have more difficulty picking up atmospheric signals during the seasonal transition months, reducing forecast accuracy. Regardless, rains will be slowest to return to the Plains states. One of the keys to watch will be whether currently cool waters off the North American west coast begin to warm as expected, which would support a more favorable summer growing season for the Midwest. The U.S. weather pattern is already showing signs of significant change, which is expected to wipe out soil moisture deficits over central and eastern portions of the Midwest over the weeks ahead, although it could create some narrow planting windows for the southern Corn Belt as well.

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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

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