Perspective: Morning Commentary for May 12

By: Arlan Suderman, Chief Commodities Economist

Fri, 12 May 2023, 13:06

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 12 – Wall Street enjoyed a bit of a “risk-on” sentiment this morning as regional bank shares stabilized, easing concerns on the Street. The VIX slipped below 17 in early trade, reflecting a contentment spreading across Wall Street this morning. The dollar index rallied to a fresh 10-day high near 102.3. Yields on 10-year Treasuries are trading near 3.41%, while yields on 2-year Treasuries are trading near 3.92%. The broader commodity sector is also firmer on the morning’s “risk-on” sentiment, with crude oil prices modestly higher in early trade. The grain and oilseed markets are mixed to firm ahead of today’s highly anticipated USDA WASDE crop report, with little movement in corn and soybean prices, but more substantial gains seen in the Kansas City and Minneapolis hard red wheat markets on expectations that USDA will print a small production number today due to this year’s weather problems that could further tighten the balance sheet.

New loans in China fell sharply in April to CNY 718.8 billion, according to the People’s Bank of China, which was only about half the total expected. The steep decline in loan growth signals a reluctance to invest in this time of uncertainty, spelling trouble for China’s economy. Sharp declines in loans to both corporations and in residential lending reflected the broad weakness in China’s economy, and possible more significant problems continuing in China’s property sector. Pressures are growing for China to initiate a more significant stimulus program, but that could significantly devalue the yuan at a time when the dollar is stronger due to our monetary tightening, with the same being true of Europe. The bottom line is that the Chinese people do not have confidence in China’s economy, and the timing is very poor for the government to initiate stimulus, while trying to prop up the yuan at a time when it is trying to move the world toward favoring this currency over the dollar.

Mixed signals came out of Russia today regarding the possible extension of the Ukraine grain initiative. Russian news agency TASS reported earlier that its sources suggest that a 60-day extension will likely be announced today. But that contradicts comments coming from the Kremlin, which continued to hold to the hard line of recent weeks. It shouldn’t be a surprise that negotiators would hold a hard line down to the eleventh hour of the negotiations to get as much out of the talks as possible, and these talks could still fall apart. But the comments from TASS raise a sense of optimism that we will once again see another extension of the grain initiative. We will still expect to see efforts to move grain regardless of whether we get an extension, but the cost of doing business would be expected to go up. Insurance coverage for shippers is generally the most limiting factor, and insurance coverage comes down to how much is a shipper willing to pay to keep coverage. I anticipate that we’d see some type of compensation package for coverage emerge. Obviously, those costs would rise further if there would be an unfortunate incident with a cargo in the region, necessitating those shippers to again reassess the cost: benefit. But there will continue to be grain available to be shipped for the one willing to pay the costs of the risks associated.

Little of this matters though to U.S. grain traders this morning ahead of USDA’s massive May WASDE crop report due to be released at 11 a.m. Chicago time today. This will be the first crop report of the year containing USDA’s official balance sheets for the new 2023-24 marketing year. The potential for market-moving surprises is large. Traders know that the wheat crop is small due to a drought in the Plains, and they know USDA’s general intentions for corn and soybean acreage and yield on the supply side of the balance sheet. But how will USDA craft the demand side of the balance sheet for the grain and oilseeds? That will likely be the area where we’ll see the most potential for surprises – in either direction. That is what will set the tone for the growing season ahead.

China already released its new-crop balance sheets this morning. It raised this year’s corn planted area by 0.9%, while raising expected yields by 0.9% as well, resulting in a 282 million metric ton crop. Domestic demand for corn was also raised by 0.9% to 293 mmt, leaving an 11 mmt deficit to be filled with imports of 17.5 mmt, down from 18 mmt in the current year. Soybean area is also expected to increase this year, but by a more substantial 2%, with soybean yields up 3.8%, producing a 21.46 mmt crop. Domestic use is expected to remain flat near 95 mmt, reducing imports by 1 mmt to 94.2 mmt as soymeal inclusion in rations is reduced, as I’ve previously addressed in this column. The reality here is that Chinese import demand for corn and soybeans is flat to lower, at a time when Brazil is rapidly increasing the production of both, and tensions are escalating between China and the United States. It’s not difficult to see how this spells future problems for U.S. exports to China.

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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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Perspective: Mid-Day Commentary for August 7

August 7 – Stocks are looking to end a strong week on a strong note, with the major indexes all in the green at the time of writing. The VIX touched a nearly seven-month low earlier in the session and remains muted as it hovers just below the 15-mark as this morning’s ugly labor market data helps ease hawkish Fed jitters. The dollar has rebounded from its nearly two-month low earlier in the session but remains in the red on the day, trading at 99.55 at the time of writing. Treasuries have had a very volatile day, with yields tanking following this morning’s Non-Farm Payrolls release but bouncing back into midday, with 30-year yields now trading at 5.209%, 10-year yields trading at 4.654%, and 2-year yields trading at 4.204%. Crude oil has risen from the morning lows as traders eye the weekend market closure for potential geopolitical developments, with nearby WTI now down only 0.2% on the day to trade around $78.10 and nearby Brent breaking into the green, up 1.25% on the day to trade above $83.50. The ags are largely mixed, with the grains and oilseeds mostly in the green, save for a mixed picture in the soy complex, while live and feeder cattle futures move in opposite directions, with the former adding to yesterday’s sharp losses and the latter attempting a rebound.

Mike CastleFri, 07 Aug 2026, 17:09

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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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