Perspective: Morning Commentary for December 13

By: Arlan Suderman, Chief Commodities Economist

Tue, 13 Dec 2022, 14:34

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 13 – Stock futures pushed higher again overnight, ahead of this morning’s inflation data release. Yet, they saved their best action for after the data release, with this morning’s numbers coming in better than expected. This gives the Federal Reserve plenty to contemplate as it begins two days of meetings to consider changes to its monetary policy. The VIX rallied to fresh four-week highs overnight, trading near 26 at one point, but then dropped to trade near 22 following the data release. The dollar broke sharply to fresh five-month lows, trading currently near 103.8. Yields on 10-year Treasuries are trading near 3.44%, while yields on 2-year Treasuries are trading near 4.15%, representing a sharp break in the yield curve inverse. Crude oil prices are 2% higher, while the grain and oilseed markets are higher as well. The market added to those gains on the data release as the dollar broke lower.

The consumer price index rose just 0.1% month-on-month in November, down from 0.4% the previous month and down from analyst expectations of 0.3%. The CPI was up 7.1% year-on-year in November, down from 7.7% in October, and below analyst expectations of 7.3%. The core CPI that excludes the more volatile food and energy prices rose 0.2% month-on-month in November, down from 0.3% the previous month, and below analyst expectations of 0.4%. The core CPI was up 6.0% year-on-year in November, down from 6.3% the previous month and below analyst expectations of 6.1%. Wall Street was ecstatic about the 7.1% headline inflation number, and about the 6.0% core CPI number. It’s not that these are good numbers by any means. But they are declining when the market was braced for stronger numbers following last week’s hotter-than-expected producer price index.

Breaking down today’s numbers, inflation at the consumer level came in better-than-expected due to declines in most energy products, used cars, and generally non-food commodities. For example, used car prices fell another 2.9% month-on-month, after falling 2.4% the previous month, and 1.1% the month prior to that. Gasoline prices were down 2.0% month-on-month, while commodities less food and energy were down 0.5% on the month. Used cars may very well continue to decline as demand softens, and energy prices may in the near-term as well. However, energy prices could still see considerable volatility in 2023 – particularly in the second half of the year as China’s economy starts surging again and global oil production struggles to restart again. On the other hand, there remains some significant areas of concern where inflation is still a significant problem. Food prices, both at home and away from home, 0.5% month-on-month, with fuel oil up 1.7%. Services less energy was up another 0.4% on the month, while shelter was up another 0.6%. The services sector is very labor dependent, where wage inflation remains a significant issue. The bottom line is that today’s numbers are good news, but they are not sufficient to say, “Mission Accomplished.” Our supply chain issues are slowly getting worked out, but we remain very vulnerable to inflation risks in the energy, food, and areas of labor concentration sectors. This is why I expect the Federal Reserve to raise its benchmark interest rate another 50 basis points as expected tomorrow, but to also indicate more rates ahead, and perhaps for longer than the market expects as well.

All domestic travel restrictions are now removed within China, following the elimination today of its phone tracking codes. All flights going in and out of Beijing are now at 70% of pre-pandemic levels as demand for travel rapidly increases. Travel for next month’s Lunar New Year holiday is expected to reach 80% of pre-pandemic levels, when 3 billion trips were made during the extended holiday period. China’s primary focus now is on the 500 million residents living in rural areas where the healthcare system is much less developed and where most residents are elderly and poorly prepared for the epidemic. Chinese authorities are also worried about labor shortages over the next month or two as Covid sweeps across the country, that could lead to additional supply chain disruptions. Some companies are splitting the workforce, while others are offering bonuses to those who work through the holidays next month. But the bottom line is that authorities simply do not know how the “release” of the virus as restrictions are lifted will end up impacting the economy over the next several months.

China bought another 27 cargoes of soybeans last week, filling its near-term shipment needs from the United States, along with some more new-crop supplies from South America. Chinese buyers have still been unable to acquire Argentine supplies being sold under its current “pesos for soybeans” program. It’s December shipment needs are met, with roughly 1.5 million metric tons yet needed to be covered for January shipment before its needs are expected to rely almost exclusively on new-crop Brazilian production. The broader commodity sector should see tail winds from a sharp break in the dollar today in an otherwise quiet news cycle. Argentina is drying out again following weekend rains. It will see periodic rains going forward, but those rains will still be lacking, with heat an issue. Brazil, on the other hand, continues to enjoy a favorable growing season for 85 – 90% of the grain belt. Grain continues to move out of Ukraine, although at a slower pace as the war wages on.

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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: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

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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.

Mike CastleFri, 07 Aug 2026, 17:09

Grains & Oilseeds

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