Perspective: Morning Commentary for April 25

By: Arlan Suderman, Chief Commodities Economist

Tue, 25 Apr 2023, 12:24

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 25 – Stocks came under modest pressure overnight as banking concerns raised their heads once again. This pushed the VIX modestly higher to trade near 18, while the dollar index firmed to trade near 101.6. Yields on 10-year Treasuries are trading near 3.45%, while yields on 2-year Treasuries are trading near 4.07%. Crude oil prices are nearly 1% lower, while the grain and oilseed sector traded mostly lower overnight as well.

The Federal Reserve started offering dollars to banks in daily tenders in late March after the failures of Silicon Valley Bank and the sale of Credit Suisse created fears in the sector that raised liquidity risks for banks, with other central banks cooperating as well. The program was little used, but it provided a safety net. The central banks are reverting back to their usual weekly tenders now, indicating that the banking scare is behind us. Yet, money continues to flow out of the regional banks at an alarming rate chasing greater returns and security. The March banking problems left questions in the minds of depositors, while also highlighting the low returns they were receiving for their money versus alternative investments. First Republic bank shares fell 21% overnight when it revealed that depositors had pulled more than $100 billion from it, according to Reuters. Many banks are also tightening their lending requirements, essentially doing the job of slowing the economy for the Federal Reserve, albeit for different reasons. The sector has largely survived to this point due to the massive liquidity still in the system from years of fiscal and monetary stimulus – the same stimulus that contributed to our inflation problem. Nonetheless, it keeps the overall health of the banking sector on the front burner of investors minds, adding to the uncertainty on Wall Street heading into next week’s Federal Reserve meeting.

Tensions with the West continue to create uncertainty around China, with the United Kingdom the latest country to challenge it toward more transparency. Reuters reports that British Foreign Minister James Cleverly will challenge China this evening in a scheduled speech to be more transparent about its reasons for the biggest peace time build up of military strength in history, indicating that the secrecy behind it could lead to “a tragic miscalculation” leading to war. Cleverly will say that Britain is very open about seeking to deepen cooperation with its allies in the Indo-Pacific region, and he will call for China to be equally open about its intentions. Cleverly is expected to also say that isolating China would be a mistake, but at the same time he fears that China’s secrecy can lead to misunderstanding that can lead to unnecessary conflict. He is also expected to call out China for human rights violations against the Uyghur people within China, which will surely not be received well. This has not been a good week for China’s international relations, which can have implications for the commodity markets. Much of the tension focuses on a rising military presence around Taiwan. A leading diplomat in the European Union called for the EU’s navy to being patrolling the Taiwan Strait, and South Korea’s president stated recently that the Taiwan question is a global issue – not just an internal Chinese issue as China would prefer to keep it.

The Ukraine grain initiative continues to get a lot of talk, but not so much correlating concern in the marketplace as it once did. Russia demanded that the initiative only be extended 60 days in March, putting the deadline for renewal on May 18. It’s made many comments in recent days and weeks that indicate that it has no interest in extending the initiative that allows Ukraine to export grain unless significant easing of sanctions against it occurs, which is largely a non-starter with the West. Is this posturing again by Russia to get some sanction relief, or is Russia serious about bringing a halt to grain movement out of Ukraine’s ports?

The answer to that question is of utmost concern to China. Ukraine is its top source for imported corn, accounting for 909K metric tons in March. It can’t afford to be caught short, although it’s domestic demand is soft currently with wheat prices falling well below that of the feed grain, leading to considerable substitution. One has to wonder whether yesterday’s Chinese cancellation of a previous purchase of 12.9 million bushels was related to word it received from Russia that it planned to extend the initiative, or whether it was related to greater confidence in the size and availability of the Brazilian crop. My sense is the latter, but we really do not know. Brazil sent China 686K mt in March, making it the second largest source for Chinese imports currently, but Brazilian supplies are drying up until its harvest in another 60 to 75 days. Russia sent China 52K mt of corn in March.

The U.S. winter wheat crop showed additional deterioration over the past week, with its condition index score falling another 2 points to 270 this week, tying it with the record low score for the week posted in 1996. The ’96 crop was also plagued by serious drought conditions in the central and southern Plains, as is this year’s crop. Oklahoma saw the biggest deterioration this week, giving it the lowest condition index score nationally at 211, followed by Kansas at 222, and Texas at 236. All three states saw their numbers decline this week. Sixty-three percent of Oklahoma’s winter wheat crop is rated Poor to Very Poor this week, followed by Kansas at 62%, and Texas at 55%.

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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

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