Perspective: Morning Commentary for May 23

By: Arlan Suderman, Chief Commodities Economist

Mon, 23 May 2022, 13:25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 23 – Stock futures pushed higher overnight, in a general “risk-on” mode to start the week. The test will be whether Wall Street can sustain that new-found optimism through the day, and into the week, following it’s weeks-long obsession with fear. The VIX is trading near 29 this morning, reflecting elevated fear levels, although the index thus far remains below the pivotal 30 level. The dollar index is notably lower this morning near 102.3, as it trades near four-week lows. Yields on 10-year Treasuries are trading near 2.84%. The broader commodity sector found support from the overnight “risk-on” sentiment on Wall Street, but crude oil prices have slipped modestly lower this morning, while the Ags were mostly higher, lifted by a rally in wheat prices following last week’s sharp break.

The European Central Bank seeks to end negative interest rates by September, with hopes that it can move into positive territory beyond that point. Today’s announcement reflects a sharp reversal of policy from its previous stance that basically ruled out any rate hikes this year. The ECB’s current deposit rate is -0.5%, and it’s been below zero since 2014. The U.S. Federal Reserve flirted with the idea of negative interest rates at one point, but a study done by the St. Louis Fed revealed that negative rates tend to stymie economic growth, rather than to stimulate it. Headline inflation for the European economic block sits at 7.4% currently, which is far above its 2% target. The ECB’s move may allow the euro to strengthen in the months ahead, which could then allow the dollar to pull back further from its recent 19-year highs – all else being equal.

Beijing recorded more daily Covid infections than Shanghai for the first time on Sunday, resulting in tighter restrictions for the capital city, even as Shanghai slowly eases restrictions. Nearly one in nine cases are asymptomatic, making it a greater challenge to identify and to control, while also saying something about the lack of severity of the overwhelming majority of the cases with the current variant. Yet, China is committed to maintaining its zero-tolerance policy toward Covid through at least October, when its Congress meets again. Even so, new cases continue to show up in lockdown areas in Beijing. Efforts to control the virus are going a bit better in Shanghai, where Covid numbers are at a two-month low, with “just” 560K people still in high-risk lockdown zones, which is roughly 2.2% of the city’s population. Even so, rail passenger numbers are just 10% of pre-pandemic levels in Shanghai, while up to 10K people per day are said to be leaving Shanghai each day to escape the conditions. Up to a fourth of China’s population is directly impacted by the lockdowns and restrictions, but that includes some of the most important economic centers in the country.

Ukraine hopes to export 1.5 million metric tons of grain this month, up from just over 1 mmt in April. I think that 1.5 mmt may be overly optimistic, but they could come close to that target, as they continue to make improvements in the logistics necessary to move grain over land to the west. Even so, that’s still less than a fourth of their monthly exports prior to the war. Spring planting is in its final stages in Ukraine amid shortages of fuel, fertilizer, and chemicals. The Ministry of Agrarian Policy reports today that Ukraine farmers have acquired 23.9K metric tons of crop protection chemicals thus far, which is 75% of the needed volume for the first half of this year. The total includes 15.5K tons of herbicides, which too is 75% of the needed volume. Farmers in Vinnytsia, Poltava, and Dnipropetrovsk have virtually all of the chemicals needed, while those in Zaporizhzhia have just 24% of the needed product, and Donetsk sits at 28%. These are areas that may struggle more with weed and pest control this year, that reduces yield potential.

Soybean traders focused on contra-seasonal strength in export demand over the past week or two, while corn took the negative side on spreads, as traders have few fears that we’ll run out of the feed grain before this fall’s harvest. I look for that focus to start shifting again this week to the 2022-23 balance sheet for corn as we count down the final week of planting in the month of May. Look for traders to start running the numbers following this afternoon’s USDA weekly crop progress report, figuring out how many corn acres will be planted late, increasing the risk of yield drag, and how many acres will not get planted at all, or possibly to another crop? The weather shifted to more of an active pattern again for much of the Midwest. Cooler readings will continue to slow drying. We should see warmer readings late in week #1 into early week #2, before cooler readings return once again. A lot of crops will be planted in less than desirable conditions to get it done. Of greatest risk is corn ground in the upper Red River Valley between North Dakota and Minnesota. Another focus point will be this morning’s weekly soybean export shipment total.

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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Perspective: Morning Commentary for August 5

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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