Perspective: Morning Commentary for December 14

By: Arlan Suderman, Chief Commodities Economist

Wed, 14 Dec 2022, 14:28

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 14 – Today’s focus is on the Federal Reserve, which will release its updated monetary policy statement early this afternoon, while traders also monitor the rapid spread of Covid in China now that restrictions have been lifted. Stock futures were mixed to weaker overnight as traders brace for this afternoon’s Fed statement. The VIX had a wild day on Tuesday, trading between 21 & 26, reflecting big swings in trade emotions throughout the trading session on the release of the latest inflation data. Nonetheless, the VIX is trading below 23 this morning ahead of the Fed’s statement. The dollar index fell sharply to fresh five-month lows on Tuesday, but it has settled down a bit to trade near 103.9 this morning. Yields on 10-year Treasuries are trading near 3.51% this morning, while yields on 2-year Treasuries are trading near 4.19%. Crude oil prices are modestly higher this morning, while the grain and oilseed markets are mostly lower.

Federal Reserve policymakers are meeting again behind closed doors today to finalize their updated monetary policy statement, which they will release at 2 p.m. ET this afternoon. The market fully expects the Fed to raise its benchmark rate by 50 basis points this afternoon, which would be a decrease from the 75 basis points that it’s been raising the rate in recent meetings. However, the greatest interest will likely be in the dot plot graphic released by the Fed following today’s meeting, as well as in Fed Chair Jerome Powell’s comments before the media following the statement’s release. I expect both to reflect higher peak rates than the market has been expecting, and with longer duration of rates. Fed fund futures trading currently reflects market expectations that the peak rate will top 4.75% by the March meeting, with the benchmark rate starting to decline again by fall of next year. Look for the Fed to acknowledge the positive signs of peak inflation, but to reiterate the challenge presented by high shelter prices and of high wage inflation in bringing down overall inflation to the 2% mandated target. This particularly shows up in the service sector, which is very labor intensive. The tone of the Fed’s comments will mean almost as much, if not more, than the words themselves. Powell has done well in developing his craft for communicating his desired message during his term as Chair of the Fed, so his words before the media will be very intentional in sending the desired message, and they will be taken in that light as well.

China continues into the vast unknown, after shocking the world with a 180 degree turn in its Covid policy, leading to longer-term economic optimism that will most certainly also lead to a murky period of uncertainty that will be difficult for traders to forecast. In a few weeks, China went from tight restrictions and mandatory regular testing to totally opening up without tracing, required testing or travel limitations. China’s policy flipped from trying to contain the virus to appearances of wanting to rapidly spread the virus. I’m sure that’s not the case, but the dramatic flip in policy almost had that appearance. Beijing is the hotbed of the virus spread currently, but other cities are seeing rising cases as well. State media reported some 50 people are critically or seriously ill in hospitals in Beijing, with demand for healthcare also rising in Wuhan and Chengdu, as well as in Hebei province. No official numbers are available anymore on total infections, due to dropping the requirement to be tested. China is now paying the price for shielding its population from the virus, keeping it locked down in many cases to reduce immune systems, but more significantly keeping it from developing herd immunity. It would argue that it has done so while allowing the virus to mutate to a less-lethal variant, and that is certainly true. For better or for worse though, we know that China will emerge from this outbreak in a few months with herd immunity, and when it does so, we should see a rapid recovery in its economy, leading to growth in the consumption of commodities. We just don’t know what’s going to happen in China between now and then, and to what extent will the virus’ spread weaken the country?

The port of Odessa began loading ships again late Tuesday, after power was restored to the facility. All three ports that are permitted to load ships under the grain initiative are now back in operation after a Russian strike on power facilities knocked them offline over the weekend. Shipments from Ukraine will resume, although still at a slower pace than they had been earlier this fall. The broader commodity sector found support from a sharply lower dollar on Tuesday, although currency trade has stabilized today, removing that as a factor for now. The exception is crude oil, which continues to bounce higher amid reports of a rapid increase in travel within China following the lifting of restrictions. The weaker dollar provided a boost for the meat sector as well on Tuesday, with cattle traders taking note of a slowdown in slaughter rates that is expected to be the primary theme in 2023. Overall U.S. beef production is expected to be down 8% in the coming year as the impacts of a shrinking cowherd begin to be felt.

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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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