Perspective: Morning Commentary for November 3

By: Arlan Suderman, Chief Commodities Economist

Wed, 03 Nov 2021, 13:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 3 – It’s Fed Day on Wall Street, with traders anxiously waiting for the central bank to announce its road map toward tapering later today. The VIX remains calm near 16 this morning, while the dollar index is trading near 94.1. Yields on 10-year Treasuries are slipping lower to trade near 1.54%. Crude oil prices are down by nearly 3% this morning, providing a drag for the Ags as well.

The private sector created 571K jobs in October, according to today’s ADP employment report, up from analyst expectations of 400K jobs created. However, the September numbers were revised to 523K jobs created, down from the 568K originally reported. Today’s report sets a positive tone for Friday’s government jobs report. Analysts expect that report to show that non-farm payrolls grew by 400K in October, with the unemployment level ticking lower to 4.7%, down from 4.8% previously. Analysts also expect Friday’s data to show that average hourly earnings rose 0.4% month-on-month in October, while up 4.8% year-on-year, reflecting strong wage inflation.

The Federal Reserve is scheduled to release its highly anticipated revised monetary policy statement at 2 p.m. EDT today. That statement is expected to contain the Fed’s schedule for tapering its massive asset purchasing program in the months ahead. The statement may make passing mention of future interest rate hikes, but the focus is expected to be on the tapering. Yet, the press conference with Fed Chair Jerome Powell at 2:30 p.m. EDT is expected to drill down more on the interest rate hikes. Wall Street knows it is coming, so that shouldn’t be a surprise. Rather, the most important thing for Powell to do in his comments, in addition to the released statement, is to reassure Wall Street that he comprehends the inflation risks to the economy, and to reassure traders that the Fed has a solid plan for addressing the situation. Volatility comes from the lack of assurance, leading to uncertainty. As such, this afternoon’s comments will be closely followed by the global markets, setting the tone going forward.

China reported 93 new local Covid-19 cases for Tuesday, the latest day for which data was available, up from the previous high of 59 for the current outbreak. More significantly, the cases are showing up in 10 different provinces across China. Lockdowns and restrictions continue to spread within China as an increasing number of people are told to quarantine. That requires them to test multiple times, while taking their temperature a couple of times a day and report the results to health authorities. Many countries are transitioning their policies to one of “living with Covid” as a larger percentage of their populations are vaccinated. However, China Direct, published by our Shanghai office, notes that a few interviews with public officials lately suggested that China will continue to pursue its zero-tolerance policy for Covid. As such, this latest outbreak poses a greater risk to China’s economy, as well as to supply chain logistics that originate within China.

High input costs continue to be the talk across the global Ag landscape, with concerns that high prices and availability concerns may significantly influence cropping patterns in 2022. That story continues to get traction as fertilizer prices continue to trend higher. One reputable trade source is now reporting that Russia is indeed researching the possibility of either slowing or stopping fertilizer exports. This has been highly rumored over the past week, but it appears that official channels have now been opened for this to happen. It’s not a guarantee that shipments will be slowed or halted, but it follows the pattern already seen in China, adding to the tight global supplies. Rapidly rising prices for nitrogen fertilizer captures most of the attention, with the cheapest form of nitrogen – anhydrous ammonia – already priced at $1,100 - $1,300 per ton. But the phosphate market may be even more troubling, according to Josh Linville, StoneX’s Director of Fertilizer. Russia may shut down its exports of near 1.7 million metric tons, with China already shutting down its 4.6 mmt of annual shipments. India, one of the world’s larger buyers, is already short of supplies, with less than a third of their normal inventories for this time of year, creating a troubling battle over limited supplies for global farmers. Most at risk will be corn production in 2022.

Commodity inflation takes a back seat while traders wait to hear from the Federal Reserve this afternoon. Crude oil prices are notably lower as we prepare to start trade in the Ags this morning, which creates some headwinds. Expectations that USDA will raise its corn and soybean yields next Tuesday add additional headwinds until the focus shifts again to inflationary pressures. As such, the Ags are starting the day on a negative note today. The key commodities to watch have been Minneapolis wheat, the edible oils and corn.

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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.

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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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