Perspective: Morning Commentary for September 29

By: Arlan Suderman, Chief Commodities Economist

Wed, 29 Sep 2021, 13:34

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

September 29 – Stocks firmed overnight, albeit in a cautious environment, amid a plethora of fiscal and monetary concerns. The VIX is trading near 23 this morning, reflecting the elevated concerns, although there are few signs of panic on Wall Street. Traders are being cautious, but they still expect the can to get kicked down the road and the money to continue to flow. The dollar index traded to levels just below 94.0 this morning, which was its highest level since early November of last year. Yields on 10-year Treasuries are trading near 1.52%, after hitting new 3-month highs near 1.57% on Tuesday. Crude oil prices are modestly lower this morning after trading just below July’s multi-year highs. The Ags were mostly higher overnight as they recouped part of Tuesday’s notable losses.

Wall Street’s complacency is getting challenged this week. The immediate focus is Congress’ ability to fund the government past Thursday night at midnight, but it’s not overly worried about that. Stocks frequently perform quite well when the government is closed. Its larger concerns are focused on whether Congress can effectively deal with the debt ceiling prior to the October 18 deadline if it has trouble merely funding the government? The assumption is that Congress will do what Congress always does – raise the debt ceiling and kick the can down the road. Both parties have done so each time in the past, and this Congress is expected to do so as well, but we could see some nerves tested over the next three weeks in a month that always has Wall Street nervous anyway. October is known for its challenges on Wall Street.

Fed Chair Jerome Powell came the closest to date to admitting yesterday that some of the current inflation pressures may be perpetual. Powell is under increased scrutiny as he seeks renomination to his post for another term, with Senator Warren making her opposition to his nomination quite clear on Tuesday, when she called him a “dangerous man” to lead the central bank. Her opposition to Powell isn’t a surprise, but he’s certainly had a rough road. He raised interest rates before he had to cut them again. Now he seems afraid to raise them again, or to engage in any tapering, despite a strong economy, to appease the Biden Administration that would renominate him. Powell first stated that U.S. inflation was transitory – would last “a couple of months” – despite warnings from many economists that it was much more of a longer-term threat. Many of his voting Fed members are now raising those same concerns. This provides the backdrop for a $1.2 trillion infrastructure bill and a $3.5 trillion social spending bill (that really adds up closer to $5.5 trillion) before Congress this week. Again, many economists believe that the added spending spree would further contribute to inflation, which is already at multi-year highs.

Natural gas traded to $6.28 on Tuesday, its highest level since early 2014. Prices in Great Britain reached highs more than four times that level. Crude oil prices are currently trading just below seven-year highs. Fertilizer prices are surging, with some analysts fearing that they may reach record highs. Natural gas is the main feedstock of many nitrogen fertilizers. Surging natural gas prices are a product of several different factors, but they are often seen as a precursor to higher crude oil prices as well. China produces nearly 40% of the world’s phosphate fertilizer and it accounts for nearly one-third of the world’s exports. It reportedly has a moratorium on exports through next June. The bottom line is that more and more analysts are again talking about inflation in the commodity sector. That doesn’t mean that every commodity goes higher, but it does often suggest that money flow increases into the sector. Commodities can still have their ebbs and flows, but they tend to do so at a higher plateau.

It’s in that environment that the grain and oilseed markets enter into a critical period. USDA will release its small grains summary report tomorrow. It will be the first time that USDA acknowledges this year’s anticipated high abandonment rate for the spring wheat crop. That should result in another reduction in crop size, unless state statisticians have already been accounting for that by adjusting their yields to account for the artificially high harvested acreage numbers used to this point. Tomorrow’s quarterly grain stocks reports are also known for their surprises, but those surprises can be in either direction. Corn and soybean harvest are rapidly advancing, giving us a better idea of this year’s crop size. Both crops are good overall but are they big enough to meet anticipated demand over the coming year? The corn yields that I have seen have been better than expected in the dry northwestern Ag belt, and lower than expected in the eastern belt. Soybean yields have been highly variable, but thus far seem to be leaning to much better than expected. StoneX is scheduled to conduct its customer yield survey next Monday. USDA will release its revised estimates on October 12^th, that is, if it is still funded and open.

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This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.

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Perspective: Morning Commentary for August 6

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Mike CastleThu, 06 Aug 2026, 13:24

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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

Grains & Oilseeds

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