Perspective: Morning Commentary for July 5

By: Arlan Suderman, Chief Commodities Economist

Tue, 05 Jul 2022, 13:17

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

July 5 – The markets still have a hangover as U.S. traders return from a three-day holiday weekend, with economic worries topping the list of concerns. U.S. Ag markets have not yet re-opened following the holiday. High inflation numbers haunted the markets in Europe, sending the euro notably lower, which in turn pushed the dollar index to fresh 19-year highs. The VIX is trading near 29 this morning, reflecting elevated concerns about the economy. The combination of the strong dollar and strong VIX creates headwinds for those commodities lacking a strong story of their own. Yields on 10-year Treasuries are trading near 2.81% this morning, reflecting concerns about the U.S. economy as well, which could result in reduced demand for commodities.

Crude oil prices traded both sides of unchanged overnight, trading more than a $6 range as traders try to balance concerns about tight supplies with fears of eroding demand. Those fears were amplified today on emerging indications that China may be on the cusp of renewed Covid lockdowns. OPEC+ is struggling to increase output, but global demand has its challenges as well. This sets up a period of consolidation as traders wait for clearer direction, although the Algos will do what they can to create sufficient volatility to keep them involved in the market.

I do not see China defeating Covid with lockdowns. Viruses mutate, and they continue to mutate until they can find a way to defeat our best efforts to control them. Many major economic centers in China, including Beijing and Shanghai were caught up in lockdowns starting in late March stretching into June as the government tried to contain Covid. Citizens of these cities finally gave a sigh of relief over the past several weeks as lockdowns were gradually lifted, and life started returning to normal. However, it was just a matter of time before Covid would find its way in again, and that appears to be happening, raising fears again this morning that the critical areas of the country may again be on the cusp of lockdowns.

Today’s edition of China Direct, published by our Shanghai office, notes that 69 domestically transmitted cases, and 266 asymptomatic cases, were identified on Monday, with 52 confirmed cases and 179 silent cases in Anhui province. More than 1,000 infections have occurred in Sixian, in Auhui province near Shanghai in the past week. At least 12 cities in the Yangtze Delta region have been impacted, included Jiangsu province and Shanghai. At least eight rounds of massive testing have been conducted already in Sixian, with reports of a significant increase in testing requirements for regions of Shanghai late today. There are no indications yet that authorities have sufficiently contained the latest outbreak of what appears to be a faster-transmitted variant of the virus.

The bottom line is that China’s economy faces another potential challenge as it continues to hurt from the last round of Covid-related shutdowns this spring. That has a direct negative impact on demand for various commodities. Energy is most directly impacted by the increased restrictions and lockdowns, but food consumption is impacted as well. People in China tend to consume less meat when they eat at home versus eating in restaurants. The latter is more of a feared risk than reality currently. Hog feeding margins are improving as pork prices push higher currently. As such, the industry is cautiously optimistic that it will see better margins in the last half of this year, increasing demand for feed grains and protein. Part of that optimism though is contingent on China being able to avoid widespread lockdowns again.

It’s been a rough two weeks in the grain and oilseed sector. Massive liquidation of speculative ownership did significant damage to the charts as the day-trading Algo computers piled on selling pressure. End users welcome the lower prices to extend coverage, but they also see little need to actively step in as buyers until / unless the markets show some signs of easing selling pressure. One thing that could stimulate a reversal this time of year would be increased weather concerns. That has not yet been the case. Rains scattered across the Midwest over the past week. Not everyone received the rains, but the perception is there that the rains were widespread. More rains are expected over the coming week, along with the possibility of some strong storm clusters. The outlook is less promising for week #2, when corn pollination will be picking up momentum. Forecast models are not in agreement, but there’s a bit more bias toward warming up and drying out across the Midwest in week #2, although the more intense heat is expected to be focused to the west of the Midwest. The key time period to watch for risks will be the last two weeks of July and the first week of August.

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Digital Assets
Energy
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Cotton
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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
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

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
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

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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