Perspective: Morning Commentary for November 16

By: Arlan Suderman, Chief Commodities Economist

Tue, 16 Nov 2021, 14:31

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 16 – Stock futures were mixed in early trade, following last night’s virtual summit between President Biden and China’s President Xi Jinping, and following this morning’s retail sales data. The VIX continues to consolidate either side of 17 this morning, while the dollar index rose to 95.8 to post fresh one-year highs. The dollar strengthened as yields on 10-year Treasuries rose to 1.635% to nearly three-week highs. Crude oil prices are mixed this morning, while the Ags were mostly lower in early trade as the dollar rallies.

The Biden Administration lowered expectations ahead of last night’s virtual summit with China’s Xi Jinping, and they met those expectations. Little substance came out of the talks, although the Biden Administration hopes that it helped restore the conversation in a productive manner at a time when tensions are at an all-time high with the Communist Party of China. Trump’s trade war with China escalated tensions, but he and Xi Jinping made progress in the talks. I’m not here to debate Trump’s tariff strategy, or many other aspects of how he handled the office, but my Chinese sources note that there was one factor that made his strategy effective. The Chinese culture values relationship. I don’t know whether Trump understood that, or whether he simply had good advisors, or perhaps got lucky, but he focused on that – frequently speaking with respect about Xi Jinping and how much he enjoyed their conversations, even as he challenged him. The Chinese do business with those who engage them on a relationship level that includes respect. It’s a different mindset than we often approach things in the West. Trump successfully did that. The Biden Administration now gets its turn at attempting to do so. It’s success with China will hinge on whether Biden can be successful at it.

Retail sales rose 1.7% month-on-month in October, more than doubling the pace of 0.8% growth seen in September and well above the 1.0% growth rate expected by analysts. Retail sales minus vehicles also rose 1.7% month-on-month in October, up from a solid 0.7% in September and exceeding the 0.9% growth rate expected by analysts. Retail sales excluding both vehicles and gasoline rose 1.4% month-on-month in September, nearly tripling the 0.5% pace seen in September and significantly above the 0.8% growth rate expected by analysts. It’s important to put these numbers into context. Covid numbers rapidly declined through September, so you could interpret today’s numbers as indicating that the economy was strong in a post-Covid environment. It can be said that these strong numbers suggest that the consumer still has money to spend, and he/she wishes to do so. That creates even more bullish expectations as we head into the holiday sales season. However, you could also interpret these numbers as indicators of inflation. Sales of the same quantity of goods, but at higher prices, creates increased retail sales data. As such, today’s retail sales data would be expected to be higher based on higher prices for the goods sold alone, assuming that volume is the same. In this case, it appears to be a mix of all of the above, with an increase in both volume and value (inflation) accounting for the strong numbers.

China’s state newspaper Economic Daily reports that the portion of corn in compound feed rations fell to 38.8% in the first three quarters of this year, down from 52% in 2017. The use of soymeal in rations fell to 15.6%, down from 17.9% in 2017. The state publication credits the reductions to the Ag Ministry’s feed guidance released earlier this year to cut down soymeal use. Our own China Direct newsletter breaks this down. It suggests that the changes came from domestic livestock producers responding to market signals. Wheat was cheaper than corn for much of this year, leading many producers to substitute wheat for corn in rations. Wheat has a higher protein content than corn, allowing them to reduce the soymeal in the rations. Chinese producers tend to over-use protein in rations anyway, so the reduction had little impact on productivity. On a related note, China’s NDRC released four objectives to ensure a stabile food supply. The included 1) increase production capacity, 2) improve the food policy support system, 3) regulate and control grain reserves, and 4) diversity import sources.

The Minneapolis wheat market successfully found a price level that would ration demand. Now prices are falling to find that level that re-establishes demand. Soybean prices found new life from resurgent demand for soymeal; especially into Canada, where a lysine shortage shifted feed consumption away from distillers’ grains. There’s still ongoing speculation on whether China will reopen the door for U.S. DDGS imports, although the lack of availability of containers may make that difficult. Doing so would be expected to raise the price of DDGS, shifting some domestic demand back to soymeal. This has soybeans testing the top of this fall’s descending chart channel.

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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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