Perspective: Morning Commentary for February 27

By: Arlan Suderman, Chief Commodities Economist

Mon, 27 Feb 2023, 14:42

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

February 27 – Stock futures rallied this morning following the release of today’s durable goods orders data containing a negative headline number. The VIX is trading near 21 at this hour, reflecting easing worries on Wall Street relative to last week, when the “fear index” rallied to nearly 24, which was its highest level since the first trading day of the year. The dollar index is falling with Treasury yields this morning following the release of the durable goods orders data, trading near 104.8, after posting a fresh seven-week higher above 104.8 earlier in the morning. Yields on 10-year Treasuries are trading near 3.91%, down from 3.98% prior to the data release. Yields on 2-year Treasuries are trading near 4.78%, after trading as high as 4.86% earlier in the session. Crude oil prices are trading 1% lower after chopping either side of Friday’s close overnight. The grain and oilseed sector had a firmer bias to it overnight, especially for soybeans, followed by corn, although the sector is trading weaker at this hour.

Durable goods orders fell 4.5% month-on-month in January, which is worse than the 4.0% decline anticipated and certainly worse than the 5.6% gains posted in December. However, durable goods orders minus transportation rose 0.7% month-on-month in January, beating analyst expectations that they would be flat, and better than the 0.1% contraction posted in December. Core durable goods that include computers and other equipment utilized by business grew 0.8% month-on-month, beating analyst expectations that they would drop 0.1%, and certainly better than the 0.2% decline in December. Wall Street chose to focus on the negative headline number, believing it provided evidence that the economy is slowing down without additional help from the Federal Reserve, but I suggest that the greater focus should be on the core durable goods numbers, which shows more expectations for resiliency in the economy that may necessitate a more aggressive Federal Reserve going forward.

Today’s early Wall Street response provides an illustration of the market’s desire’s built on hopes more than built on facts. The fact is, the Federal Reserve has a mandate to bring inflation down to 2%. Wall Street continues to hope beyond hope that it can achieve that goal with a soft landing. It interprets the current resiliency of the economy as evidence of how the economy is thus far absorbing the rate hikes well, showing resiliency in most, but not all, sectors. But that doesn’t solve the most deeply engrained cause of inflation – wage inflation. There are two ways to cure wage inflation – increase the supply of workers or decrease the demand for workers. The Federal Reserve has few if any tools in its toolbox to increase the supply of workers. As such, it must resort to decreasing the demand for workers to bring the number of job openings down to a level where they are in balance with the number of people looking for work. It does that by bringing the economy down to where demand for goods slows so much that employers reduce their workforce and quit hiring. Only then do you bring the two into balance.

Crop stress is expected to expand to nearly three-fourths of Argentina’s grain belt over the next 15 days as yield projections continue to fall. A smaller corn crop should support higher U.S. corn exports over the last half of the marketing year, although we see no evidence of that yet. However, it does increase the pressure for Brazil to produce a large Safrinha corn crop. I’ve already documented how Argentina’s short soybean crop that will likely be closer to 30 million metric tons than to 35 mmt will alter the flow of soybeans in South America. There are paths for the big crop in Brazil to flow south to Argentine crushing plants, along with soybeans from Paraguay and Uruguay to keep the world supplied in soymeal and oil. However, margins must remain high enough to pay the bill for freighting those soybeans south, and that means not seeing a big break in the soymeal market. Doing that could bring a shift in demand north to the United States.

The risks are elevated for Brazil’s corn crop. StoneX reported Friday that 32% of Brazil’s soybean crop was harvested, down from 46% last year, but last year was a very fast year. Safrinha corn planting progress was at 47%, down 20 points from the previous year. The rains are still not a significant problem for the soybeans, but rather the focus is getting the corn crop planted in time so that it can make early grain fill stage prior to the rainy season ending. That happens first in Mato Grosso, and then shifts to the south and to the east. Mato Grosso corn was 72% planted on Friday, with another good week expected this week. The concerns are just to the south in Mato Grosso do Sul and Parana, where just 17% of the crop is planted. I’m concerned because the weather forecasts for this area look wet over the next two weeks, which will keep progress slow. That’s significant because to this point the rains were migrating south in the forecast, which opened the door for the work getting done in time, albeit it a bit later than optimal. That doesn’t look to be the case anymore. This crop is going to go in late, particularly south of Mato Grosso. Again, this doesn’t automatically mean that Brazil will produce a short corn crop this year. The financial incentive is there to get the crop in the ground, albeit late. It just means that we need to see the rainy season stretch into May, rather then end in the last half of April. That can happen. But it is a higher risk for the Brazil crop when Argentina and Ukraine production is already down notably.

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Perspective: Morning Commentary for August 7

August 7 – The U.S. economy unexpectedly lost 23k jobs in July, dramatically below market expectations of an 80k increase and marking the worst Non-Farm Payrolls print since February. Furthermore, May and June were both revised sharply downward, with combined revisions showing 103k fewer jobs than previously reported. Outside of the healthcare sector, which added 22k jobs in July, the losses were very broad-based. Government payrolls saw the largest decline, shedding 53k jobs in July, the largest seen since October 2025, while June was revised down to show a loss of 10k jobs as well. The private sector at least saw growth, adding 30k jobs in July, now matching the month prior after it was revised down from the 49k initially reported, and substantially missing forecasts of 78k jobs being added. This is a sharp reversal in course from the largely better than expected U.S. labor data seen earlier this week.

Mike CastleFri, 07 Aug 2026, 13:26

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Perspective: Mid-Day Commentary for August 6

August 6 – Stocks remain quietly mixed at midday as both the S&P 500 and Dow Jones remain just below their fresh all-time highs put in yesterday. This is allowing the VIX to cool to a four-week low below the 15.4 mark, reflecting the collective sigh of relief in the market amid largely better than expected U.S. economic data today. The dollar remains quietly in the green in its relatively tight range this week, trading at 99.9 at the time of writing. Treasuries remain elevated but have cooled from their recent peaks, with 30-year yields trading at 5.189%, 10-year yields trading at 4.647%, and 2-year yields trading at 4.229% at midday. Crude oil also remains quietly in the green, with nearby WTI up 2.3% on the day trading near $76.80 and nearby Brent up 2.4% on the day trading near $81.40. The ags remain mixed, with the wheat complex now squarely in the red while corn and soybeans cling to small gains, and the livestock complex largely pushes lower.

Mike CastleThu, 06 Aug 2026, 15:18

Grains & Oilseeds

Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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