Perspective: Morning Commentary for April 14

By: Arlan Suderman, Chief Commodities Economist

Fri, 14 Apr 2023, 13:37

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 14 – Solid earnings reports set the early tone today, but things quickly turned lower again on worse-than-expected retail sales numbers that raised recession worries, with the data triggering selling in both the equities and the commodities. The VIX is trading near 18 this morning, or just above Thursday’s 10-week low, suggesting little panic on Wall Street. The dollar index rallied on the data release, pushing to 101.2. Yields on 10-year Treasuries are trading near 3.49%, while yields on 2-year Treasuries are trading near 4.08%. Crude oil prices are near unchanged after running into resistance near the 200-day moving average the past two days. The grain and oilseed sector was mostly lower overnight.

Retail sales fell more than expected in March, raising fears of a more significant recession in the months ahead. Retail sales fell 1.0% month-on-month, which was much larger than the 0.4% decline expected by analysts, although the February number was revised from -0.4% to -0.2%. Retail sales minus vehicles fell 0.8% month-on-month in March, which was twice the -0.4% expected by analysts, after being flat in February. Retail sales minus vehicles and gas were down 0.3% month-on-month, after also being flat in February. Putting today’s numbers into perspective, a decline in gas prices combined with slower vehicle sales to drag the headline number much lower than expected. However, overall retail sales still slumped modestly, even without the big drag of gas and vehicles.

Today’s data provides further evidence that the consumer is pulling back spending, which is what one would expect from the low consumer sentiment numbers. The Fed’s worry is that there’s still too much stimulus left in the system that would trigger a resurgence in consumer spending – and therefore inflation – if it pivots too quickly resulting in a bullish market response. It wants to be careful not to pivot before its been able to extract enough stimulus from the system. The problem is that nobody knows how much “enough” is. The Fed also knows that resurging energy prices could further complicate the inflation problem if it pivots too quickly. That doesn’t mean that it might not pause its rate hikes, but a rate reduction is not likely any time soon based on what the Fed has communicated. We’ll see updated consumer sentiment data later this morning to provide further insight into what the consumer is currently thinking, which will also be considered by the Federal Reserve when it meets next month.

Brazil’s President Lula met with China’s President Xi today in Beijing, after Lula stopped in Shanghai earlier in the week to see the BRICS New Development Bank in Shanghai. The bank was set up to facilitate loans, investments, and trade settlements among BRIC member countries, which currently includes Brazil, Russia, India, China, and South Africa. The NDB allows these member countries to clear transactions without needing to use U.S. dollars through the SWIFT banking system that was used to sanction Russia following its invasion of Ukraine. Today’s edition of China Direct, published by our Shanghai office, indicates that Algeria, Iran, and Argentina have applied to join BRIC, while Saudi Arabia is on the list as well. Xi Jinping has had a parade of world leaders in Beijing over the past month as he seeks to strengthen coalitions with nations that would isolate the United States.

Part of China’s strategy also includes reducing its dependency on imported soybeans. China has a three-year plan to further reduce soymeal inclusion in feed rations to reduce their need to import soybeans. Its new goal is to see inclusion in rations drop to 13.0% by 2025, which is below its previous goal of 13.5%. Inclusion at the end of last year was down to 14.5%, down from 17.8% in 2018. The current goal is to pull another 0.5% off the number each year until the goal is obtained. That is expected to reduce soymeal demand by 2.5 million metric tons annually, while reducing the demand for soybeans by 3 mmt per year. This is expected to combine with the rapid expansion of Brazilian production to eventually eliminate China’s need to import significant quantities of soybeans from the United States. Meanwhile, China is aggressively buying cheap soybeans from Brazil this year to rebuild its reserves. Basis has collapsed in Brazil due to active farmer selling of this year’s massive crop, providing an ideal opportunity for Brazil to stock up. In fact, basis in Brazil is so cheap that we’ve started importing soybeans into the U.S. Southeast.

China bought another 15 million bushels of U.S. corn overnight, according to USDA, including 9.7 million bushels of old-crop corn for shipment this summer. China continues to be an aggressive buyer of corn, which I believe is also about rebuilding its reserves ahead of any potential future conflict with the United States with Ukraine becoming a less-reliable supplier due to the war. The combination of these factors keeps U.S. old-crop stocks of corn and soybeans snug, while new-crop prospects continue to improve. Historically, the trade tends to shift to focusing on the new-crop fundamentals, while allowing the basis and spreads to do the work of rationing the old-crop supplies ahead of harvest. The rapid development of El Nino increases the trade’s confidence that we will work ourselves out of tight corn and soybean stocks in the year ahead. That may not be true for wheat, although falling corn prices can create headwinds for wheat.

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Perspective: Morning Commentary for August 12

August 12 – Today’s focus is on inflation, with the July consumer price index data out this morning. We have this, and one more month of data, ahead of the next Federal Reserve meeting. Of course, headlines from the Middle East and the Black Sea wars also have an ongoing influence on the markets. Stock futures posted gains this morning, while the VIX traded just below 15. The dollar index traded near 99.7. Yields on 10-year Treasuries are trading near 4.66%, while yields on 2-year Treasuries are trading near 4.18%. WTI crude oil is trading near $83, while Brent trades near $88 per barrel. The grain and oilseed markets rebounded from yesterday’s losses ahead of today’s highly anticipated WASDE crop report that is due out at Noon Eastern Time.

Arlan SudermanWed, 12 Aug 2026, 13:33

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Perspective: Morning Commentary for August 11

August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.

Arlan SudermanTue, 11 Aug 2026, 13:21

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Perspective: Mid-Day Commentary for August 10

August 10 - Stocks traded quietly mixed to weaker through much of the morning as investors weigh Middle East war / peace headlines with artificial intelligence concerns / opportunities. Ironically, the VIX is trading near 15, putting it just barely above 2026 lows, despite the high level of geopolitical risks and AI concerns. The dollar index continues to consolidate largely between 99.5 and 100.0 after the late July break in what appeared to be Japanese central bank currency intervention. Yields on 10-year Treasuries are trading near 4.70%, while yields on 2-year Treasuries are trading near 4.24%. WTI crude oil is trading near $81 at this hour, while Brent trades near $87 per barrel on the geopolitical risks. The grain and oilseed markets are mixed ahead of Wednesday's big USDA WASDE crop report.

Arlan SudermanMon, 10 Aug 2026, 17:02

Grains & Oilseeds

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