Perspective: Morning Commentary for April 22

By: Arlan Suderman, Chief Commodities Economist

Fri, 22 Apr 2022, 13:35

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 22 – It was a tough day on Wall Street Thursday, as trade anxiety continued to ratchet higher the longer that Federal Reserve Chair Jerome Powell spoke. Stocks sank lower as Powell sounded increasingly hawkish in his comments, elevating fears once again on Wall Street that the Fed may overreact as it tries to tame inflation, dragging the economy down in the process. The VIX rallied well above 23 early this morning as fears continued to ratchet up following Powell’s comments. The dollar index posted a fresh two-year high near 101.1 this morning, while yields on 10-year Treasuries are trading near 2.93%. Crude oil prices are trading 1% lower, albeit well off their lows, while the Ags pushed higher in early-morning trade.

Indonesia will ban all exports of cooking oil and its raw material beginning April 28 to ease local shortages contributing to escalating food inflation. The export ban will extend indefinitely as the government monitors food prices. Indonesia is the world’s largest palm oil producer and exporter. The move highlights a recent trend of governments trying to head off social unrest as food prices rise on escalating global shortages. Today’s announcement captured the headlines, highlighting food inflation issues, which in turn seemed to spark buying in the broader commodity sector – particularly among the food-based commodities. We often see this story as merely a commodity story, but it reaches far beyond that as fund managers see the connection between tight global commodity supplies, food inflation, geopolitical risks, domestic and global economic activity and money flow. They’re increasingly all tied together until supplies ease. An increasing number of countries face social unrest as food prices rise, which tends to increase the hoarding mentality among governments to ease those pressures, but which in turn amplifies the shortage of supplies, while highlighting the problem for fund managers seeking a place to hedge their investment portfolios. All of this takes place as we approach the start of the Northern Hemisphere growing season.

The Climate Prediction Center made headlines Thursday when it forecast persistent drought in the Plains through much of the summer, spreading east toward the Mississippi River as the summer progressed. The most telling graphic was one it released showing its statistical certainty for areas that it expected to see normal to below normal rainfall. A broad area of the Plains stretching east across much of Iowa and Missouri has almost near certainty of below normal rainfall in June, July, and August, according to the Climate Prediction Center. A little perspective is important here. First, as I’ve said before, the models are being shaped by the concept of persistence. The longer the drought continues in the Plains, the more the models forecast them to persist and to spread east. That’s a very real risk. But a sudden unexpected rain event to break the drought in the Plains could still radically change the outlook for the better for the Midwest this summer. That hasn’t happened yet, and it might not happen.

I discussed this with Nutrien’s Eric Snodgrass on Thursday afternoon. He acknowledges the risks, especially with La Nina lingering in the equatorial Pacific, and cool waters lingering in the Gulf of Alaska and along the West Coast of the United States. However, he’s still not totally bought in to the Climate Prediction Center’s forecast for a hot dry Midwest summer, with the drought in the Intermountain West remaining so strong. If we see triple-digit highs in Arizona next month due to that dryness, it will increase risks that the summer high sets up further to the west, with the storm track riding up and over it, drawing down milder Canadian air into the Midwest, which could clash with Gulf moisture to provide favorable growing conditions. He acknowledges that this year’s drought risks are significantly elevated, but he’s not yet convinced that it’s going to happen, due to the above factors.

One thing that we do know is that the stakes are high. Prices are just below the record levels posted at the end of the disastrous 2012 growing season, reflecting current tight global supplies, and the growing season risks are still ahead of us. Give us a good growing season, and the highs may be behind us. On the other hand, the CPC’s outlook should have sent shivers down the spine of every end user needing to buy grain and oilseeds, as it suggests that significant upside price risks remain in place, should the drier forecast verify. Well-respected forecasters can be found on both ends of the spectrum for this summer’s growing season outlook. The full spectrum of possibilities remains in place, but the potential market implications are massive. Weather forecasts, and their proper interpretation, could perhaps mean more to the markets, and to geopolitical stability, this year than we’ve seen in many decades. Demand ratcheted higher today when USDA announced the sale of 28.9 million old-crop and 24.1 million new-crop corn bushels to China overnight, with Mexico making a big purchase as well.

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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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Perspective: Morning Commentary for August 5

August 5 – U.S. equities markets are on fire this week, with both the Dow Jones and S&P 500 setting new all-time highs yesterday with futures indicating further gains again today; the marketplace remains optimistic over a deal with Iran despite no evidence of such as of yet. Crude oil is working on a lower high and low today but remains slightly on the high side on the session, while the dollar is retreating back towards Monday’s nearly two-month low. The ten-year note is steady-to-lower this morning (though solidly lower so far this month) at 4.605%, while the VIX index continues to rebound into mid-week at almost a 17-point reading this morning.

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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