Perspective: Morning Commentary for July 11

By: Arlan Suderman, Chief Commodities Economist

Mon, 11 Jul 2022, 13:31

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

July 11 – Stocks are on the defensive as we start the new week, with China facing renewed risks from Covid, and amid fears about what this week’s monthly inflation data might show. We’re scheduled to get inflation data at the consumer level on Wednesday, and at the producer level on Thursday, followed by retail sales data on Friday. That will set the stage then for the Federal Reserve’s next meeting to consider changes to its monetary policy later this month. The VIX is trading near 26 once again this morning, which is up a bit following Friday’s dip to one-month lows near 24, reflecting a bit higher fear levels on Wall Street. The dollar index posted a fresh 19-year high above 108.1 this morning, while yields on 10-year Treasuries slipped to trade near 3.03%, reflecting modest money flow toward the safe-haven assets. Crude oil prices are down nearly 2% on the increased China risks, while the Ags were notably higher overnight on increased Midwest weather risks projected next week and beyond.

China reported 46 new domestically transmitted Covid-19 cases and 306 asymptomatic cases on Sunday, according to today’s edition of China Direct, published by our Shanghai office. This new wave of Covid featuring a new variant continues to spread across the country, with new infections in 19 of the 32 administrative regions in Mainland China. The new variant BA.5.2 was detected in Shanghai over the weekend, while it is already in Xian, Beijing, and Tianjin. Downtown districts of Shanghai are scheduled to undergo several additional rounds of mass testing Tuesday to Thursday of this week. Rumors continue to spread on social media that authorities may put the city under emergency control again for another 100 days. Authorities deny the rumor, but citizens are stocking up on supplies, nonetheless. Stocks sold off in China today on fears of more risks to the economy due to Covid.

The consumer price index is expected to be up 1.1% month-on-month for the month of June, and up 8.8% year-on-year when the data is released on Wednesday. Both of those numbers would be up slightly from the previous month’s numbers. The Federal Reserve pays more attention to the core Personal Consumption Expenditures data that excludes food and energy. The Cleveland Federal Reserve currently forecasts that the June numbers for the core PCE will be up 0.38% month-on-month and up 4.58% year-on-year. Those numbers are still well above the Fed’s benchmark interest rate, suggesting that interest rates still have considerable upside risk. That worries Wall Street as we approach the next Fed meeting. Fed fund futures are trading 94% odds this morning that the Fed will raise its benchmark rate another 75 basis points on July 27, with 6% odds that it will go up 100 basis points.

Increased weather risks are seen as we move into a pattern with similarities to how we started the month of June. That pattern wasn’t that threatening, but it transitioned into a very hot dry pattern for the Ag Belt in the last half of June. The atmosphere is currently moving in that direction. The weather is shifting in an adverse direction at a time when 50% of the Corn Belt continues to battle long-term moisture deficits. Some storm clusters are possible in the region, but the overall trend is hotter and drier for the primary Ag belt. Much of the Midwest should enjoy seasonally moderate temperatures over the next five days, before this trend begins to really turn hotter, with limited moisture through the period as the corn moves into the pollination phase. Evapotranspiration rates are expected to range from 1.5” to 2.5” per week, with the highest rates focused on the western belt, and increasing next week across much of the belt. It’s too early to say that a “dome of doom” will build across the Midwest. Atmospheric signals could still change late month. But the risks are certainly increasing for crops, and the margin for error is small this year.

USDA will update its monthly WASDE supply and demand tables tomorrow, providing a fresh fundamental focus for the markets, which may already be focused on the shift toward hot dry weather for pollination and pod set. The biggest potential for surprise in the report will be in the U.S. wheat production estimate – in either direction – as this report will contain USDA’s first production estimate based on field surveys for the Northern Plains spring wheat crop. The next 30 days will be critical for that crop’s development as well as the corn and soybean crops. Otherwise, I’ll be watching for how USDA massages a 150+ million-bushel loss due to lower acreage into its U.S. soybean balance sheet. We could see modest increases in Brazil corn and soybean production estimates, while we could also see adjustments to Black Sea production and export estimates that impact the balance sheet. But overall, the big changes should wait until USDA issues its August 12 WASDE report. Keep in mind that the market’s response to both changing Midwest weather and to tomorrow’s USDA report will be within a context of what’s happening in the outside markets amid China Covid and U.S. inflation data. Be prepared for the unexpected.

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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

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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Morning Grain Comments 8-7

Morning Grain Market Comments - Matt Zeller

Matt ZellerFri, 07 Aug 2026, 11:56

Grains & Oilseeds

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