Perspective: Morning Commentary for March 7

By: Arlan Suderman, Chief Commodities Economist

Mon, 07 Mar 2022, 14:34

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 7 – The rotation of money gained momentum again overnight as fierce fighting continues in Ukraine. Commodity prices surged, while the equities fell as Wall Street continues to adjust its risk portfolio. Commodity prices are well off their highs – near session lows in some cases – although they generally remain well supported as we start the week. Contrarily, stock futures are doing the opposite, firming well off their session lows as U.S. desks open, albeit still in negative territory. The VIX is trading near 33 this morning, after trading well above 36 earlier in the session. The safe-haven assets continue to be favored. The dollar index is trading near 98.8, after hitting a fresh 21-month high above 99.4 earlier in the session. Yields on 10-year Treasuries are trading near 1.79%, after falling to a two-month low below 1.67% overnight. Crude oil prices are up 1% currently, but it traded to a 13-year high above $130 per barrel earlier in the session.

Fear continues to drive the markets. That includes fear of economic recession, fear of commodity shortages, and fear of not being able to get out of short wheat positions, among others. The fear is largely being driven by Russia’s attack on Ukraine, raising questions about Putin’s endgame, while shutting down exports of major food and energy commodities from the region. Those fears escalated in last night’s trade as the U.S. House of Representatives considers measures to ban imports of Russian oil, with a similar ban being considered in Europe. Russia provides more than 10% of the world’s crude oil. OPEC+ nations have limited capacity for increasing output, and they seemed indifferent to even considering doing so at their last meeting, with Russia a participating country. The markets reversed their overnight trends somewhat this morning as U.S. desks opened and talk of a possible ceasefire emerged. But the ceasefire offer from Russia was quickly rejected by Ukraine, as it only allowed Ukrainian citizens to flee to Russia and to Russia controlled Belarus. Meanwhile an increasing number of analysts are warning that Putin may aspire to move beyond Ukraine as we piece by piece rebuilds the Former Soviet Union. Some of that talk comes from Ukrainian warnings trying to spur help from the West, but some of it comes from analysts studying Putin’s actions and statements.

The bottom line is that Ukraine has thus far provided far more resistance than Russia, or than most analysts, expected. It’s becoming more likely that this will end up being a prolonged war to whatever degree. That increases the odds that a) Ukraine will find it difficult to plant enough this year to have any noteworthy supplies to export over the coming year, b) sanctions on Russia will make it difficult for its supplies to hit the world market (although some supplies will get through), c) the world community will be sufficiently offended by Russia’s actions to keep those sanctions on for some time, and d) Russia’s economy is likely to sink into a deep depression for some time.

China remains a risk factor during this time of risk as well, with an eye toward Taiwan. It’s carefully observing the global response toward Russia. But it has its own set of problems. It would not want to go into Taiwan with the same degree of destruction as seen in Ukraine, because China would want to preserve the industry and infrastructure of Taiwan. Yet, it also knows that it would likely mean sanctions from the West, including the possibility of U.S. soybean, corn and wheat shipments being blocked. The problem is, South America has a short crop, and China’s own wheat crop has problems as well. In fact, a high-ranking government official stated that China’s winter wheat crop is in the poorest condition in more than 20 years. Another problem is Covid. Omicron is playing havoc with China’s zero-tolerance policy toward Covid-19. China reported 214 new locally transmitted Covid cases yesterday, the highest since May 2020. There are currently 2,691 people infected with Covid in China – the highest since March 27, 2020. And those cases are spread throughout much of China. It can’t afford to lockdown the country with its economy currently so weak, but it can’t afford to open up either. That could create massive problems for its antiquated healthcare system in rural areas. As such, it is rumored to be considering some middle ground of transition away from its zero-tolerance policy.

USDA releases its WASDE crop report on Wednesday. The primary focus will be a) its downward adjustment of Brazil’s soybean production estimate, and b) how it works that reduced supply into the global balance sheet – impacting both old- and new-crop exports and imports. I calculate that South America has lost 1.3 billion bushels of production thus far this year, and that number could go higher, depending on Argentina. You can’t balance world supply and demand with losses of that scope without having some significant implications for U.S. exports, but USDA has thus far been reluctant to acknowledge such. U.S. soybeans continue to be the cheapest offer. China’s initial response was to chase this market by focusing on cheaper new-crop supplies, but it’s now started focusing on old-crop as well. Meanwhile, a significant number of shorts continue to feel the squeeze in Chicago wheat. Those contracts will eventually get out – at who knows what price – followed by the possibility of some limit down days. However, the process of reallocating the world’s supply of food will continue for months. Food shortages appear more likely, especially when weather risks are added to the equation, creating other areas of social unrest that create problems for governments in developing countries.

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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Perspective: Morning Commentary for August 3

August 3 – Equities futures are pointing higher to open the week and month, still in range of recent record highs and flush with optimism that the U.S. and others will start to negotiate with Iran over the Strait of Hormuz. A busy week is on tap with earnings reports and jobs data, among other economic releases. Crude oil is down over $5 per barrel and nearing in on three-week lows. The dollar is only slightly lower this morning but at its own month-and-a half low, while the U.S. ten-year note is also slightly on the low side at 4.68. The VIX index is rebounding a bit today after a sharp slide into the end of last week, just above 16.

Matt ZellerMon, 03 Aug 2026, 12:45

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Perspective: Mid-Day Commentary for July 31

July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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