Perspective: Morning Commentary for February 10

By: Arlan Suderman, Chief Commodities Economist

Thu, 10 Feb 2022, 14:37

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

February 10 – This morning’s inflation data is the focus on Wall Street, while Brazil is the focus in the Ags. Stocks turned lower on higher-than-expected inflation numbers this morning, raising fears once again that the high numbers will lead the Fed to drain the punch bowl. The VIX traded near 22 this morning, so we’re not seeing panic at this point on Wall Street. The dollar index firmed to trade near 96.0 following the inflation data release, as yields on 10-year Treasuries surged to a new two-year high at 2.0%. Crude oil prices are modestly higher, while the Ags traded notably higher on lower Brazil production estimates due to adverse weather.

The consumer price index rose by 0.6% month-on-month in January, which was above the 0.5% expected by analysts. Furthermore, the December number was revised higher to 0.6% as well, up from 0.5% previously. That combination pushed the CPI up 7.5% year-on-year in January, its highest level since February 1982 – a level that I remember well. Today’s number beat analysts expectations of 7.3%, while being up from 7.0% in December. The core CPI that excludes food and energy costs also came in on the hot side at 0.6% month-on-month gains and 6.0% year-on-year gains, beating analyst expectations of 0.5% and 5.9% respectively. Energy prices were up 27% year-on-year in January, and they show signs of continuing to rise. Food prices were up 7.0% year-on-year.

Policymakers like to exclude food and energy, but they are a significant portion of what consumers pay. New vehicles were up 12.2% year-on-year in January, but used vehicles were up an astounding 40.5% year-on-year. Inflation remains a major challenge for fiscal and monetary policymakers, largely due to their own previous actions. Now Wall Street must decide whether it trusts those same policymakers to appropriately manage the problem. The Federal Reserve should release the minutes of its January meeting next week, which should make for some good reading considering the apparent disagreement over policy currently in the board room, based on comments being made by various members. The next Federal Open Market Committee meeting to discuss monetary policy is scheduled for March 15 & 16. Today’s inflation numbers increase the expectations that the Fed will be more aggressive in its hawkish shift, although policymakers prefer to focus on the PCE inflation data over the CPI. Fed fund futures trading today shows growing expectations that the Fed will bump its benchmark interest rate by 50 basis points when it meets next month, followed by another 25-basis point increase in May. The Fed is also expected to discuss the possibility of shrinking its balance sheet, which means extracting some of the trillions in stimulus still in the economy i.e., Wall Street’s punch bowl.

First-time claims for unemployment benefits fell to 223K in the week ending February 5, as we began to move beyond the Omicron surge. That was down from 238K the previous week, and below analyst expectations of 230K. The four-week moving average slipped lower to 253.25K claims, down from 255K the previous week. Continuing claims were unchanged at 1.621 million in the week ending January 29^th. Recent labor numbers suggest that the economy is being very resilient following this winter’s Omicron surge, with people very quickly getting back to work amid a tsunami push to open things up and to get past Covid restrictions across the country.

StoneX Brazil released its February customer survey production estimates last week that made headlines. Many people scoffed at its 126.5 million metric ton soybean production estimate, which was down from 145 mmt in December and 135 mmt in January. USDA dropped its production estimate to 134 mmt yesterday. However, StoneX Brazil’s estimate received some validation when CONAB – Brazil’s version of USDA – dropped its production estimate to 125.47 mmt, down from 140.5 mmt last month. As I’ve said before, this is a game changer for the global balance sheet if these production estimates are validated by the combines. Most of the drought-stricken areas of South America have not yet been harvested, so the combines must still verify the lower expectations. However, there is now enough evidence of sharply lower production that end users must respect the risk. The next commodity at risk in South America could be corn if the longer-term weather models verify. Confidence in the longer-term models is always suspect, but the stakes are high enough that end users cannot afford to look the other way. The ongoing geopolitical risks in Russia / Ukraine are a factor as well. Today’s inflation numbers play into the price risks as well. High inflation numbers, and fears of Fed action, tend to support a rotation of money out of assets that are hurt by rapidly rising prices and interest rates into assets that tend to rise along with inflation numbers – the commodities. Not all commodities will rise together, but thus far it has supported a flow into the Ag & energy sectors.

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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

Grains & Oilseeds
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Cocoa
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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

Grains & Oilseeds
Energy
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Cocoa
Coffee
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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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