Perspective: Morning Commentary for May 15

By: Arlan Suderman, Chief Commodities Economist

Mon, 15 May 2023, 13:40

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 15 – A modest “risk-on” sentiment lifted both stock futures and commodity prices overnight as optimism emerges that the White House will reach an agreement with the Republican House to lift the debt ceiling prior to a feared default. Traders will also be listening closely to a plethora of Federal Reserve members scheduled to speak publicly this week. The VIX is trading near 18 in early trading, while the dollar index is trading near 102.5. Yields on 10-year Treasuries are trading near 3.50%, while yields on 2-year Treasuries are trading near 4.00%. Crude oil prices are nearly 1% higher in early trade, while grain and oilseed prices were mostly higher, with wheat leading the way with more than 3% gains following a bullishly construed crop report from USDA on Friday.

The Empire State manufacturing index for May came in at -31.8, reflecting sharp contraction for the sector in the state of New York, versus a surprising +10.8 last month that now appears more of an aberration than an encouraging trend. Analysts had expected a -2 reading today. A minus number reflects month-on-month contraction in the sector, while a positive number would reflect growth. Both new orders and shipments plunged this month, after a significant rise in April. As such, delivery times shortened somewhat, and inventories contracted. Both employment and hours worked slipped lower for the fourth consecutive month, while prices continued to rise at roughly the same rate as the previous month. Capital spending plans are sluggish, reflecting pessimism about the conditions over the next six months.

More rate hikes are possible, according to Atlanta Federal Reserve President Raphael Bostic in comments that he made early this morning. Bostic stated that he doesn’t expect any rate cuts this year, because inflation is likely to be stickier than those in the markets believe, and if anything, “we may have to go up.” Bostic admitted that there has definitely been progress on inflation, but the appropriate policy currently is to wait and see how much the economy slows from the policy actions taken thus far. However, his bias going forward continues to be that rates may need to go a bit higher to do the job of getting inflation down to the 2% mandated level. Fed fund futures are currently trading a pause in rate hikes going forward, with rate cuts starting in September, with up to three overall cuts in place by the end of the year.

No talks are scheduled on the Ukraine grain initiative this week, with the deadline rapidly approaching on Thursday. One of the keys to the process continues to be Turkey, which held a presidential election over the weekend. However, that election has thus far failed to name a winner. Observers currently project a runoff necessary, likely on May 28th. Current President Erdogan has 49.24% of the vote thus far according to state media, with his primary opponent having 45.0% with 91% of the votes counted, but accusations of vote counting irregularities already cloud the process. Erdogan has been a key component in maintaining the grain initiative, while also a friend of Russia’s President Putin. Erdogan’s opponent had promised to restore a parliamentary democracy system in Turkey to replace Erdogan’s presidential control system. There’s no doubt this has an impact on the grain initiative talk dynamics, but all of this continues to be under somewhat of a shroud of secrecy. There’s also little doubt that Russia increasingly is facing some sense of desperation. The war isn’t going well. It hasn’t had any victories of note since the middle of last year. Ukraine continues to strike key targets behind the Russian lines as it garners more weapons from NATO. Russia’s economy is hurting, with public opinion being swayed by the high body count. It’s increasingly getting difficult for Russia to supply the people, weapons and ammunition needed to win the war. A war of desperation can be a scary place to be.

USDA’s WASDE crop report had plenty of surprises on Friday. The surprises were all generally in the direction that I forecast, but by varying degrees. The bullish wheat surprises were even more bullish than I expected, although I was not surprised that the bearish corn and soybean surprises were less than I expected – especially for corn. USDA appeared to be solving for a desired ending stocks estimate for corn, rather than following where the data leads. It’s new-crop corn exports are 300 million bushels too high in my opinion, when you work it through the global balance sheet, largely due to an overly optimistic Chinese import target. Furthermore, it bumped corn feed usage by 375 million bushels, or 7%, at a time when we expect cattle-on-feed numbers to be down 4 – 5% year-on-year. We’re now officially in El Nino, which is expected to strengthen to a strong El Nino by the end of the year. Cool waters off the West Coast are also warming, supporting strong odds of trend or above yields this year. It’s very hard for me to be friendly new-crop corn prices. The best thing going for corn may be wheat fundamentals, which should provide some tail winds for the feed grain. Both domestic and global wheat supplies tighten further this year, putting more emphasis on spring wheat output in the Northern Plains, Canada, and Russia, as well as winter wheat in Argentina and Australia. As for soybeans, I’m bearish new crop there as well, but my differences with USDA are smaller. My exports there too are smaller, but USDA is too low on crush. Furthermore, Argentina’s crop likely gets smaller to the point of starting to shift more soymeal business our way. Losses in Argentina now look too big to be totally offset by Brazil. It will take a bit longer to rebuild soybean supplies.

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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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