Perspective: Morning Commentary for July 7

By: Arlan Suderman, Chief Commodities Economist

Thu, 07 Jul 2022, 13:34

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

July 7 – Sentiment is more upbeat this morning on Wall Street, after a reversal higher to finish the day on Wednesday. The minutes from the June Federal Reserve meeting held no significant bearish surprises, and the bears are tired following their recent feast. The VIX slipped to a four-week low near 26 this morning as a sense of calm hovers over Wall Street. The dollar index pulled back from yesterday’s fresh 19-year high to trade near 107.1 this morning. Yields on 10-year Treasuries bounced to trade near 2.93%. The broader commodity sector found buying interest along with stocks, with crude oil trading roughly 4% higher, while wheat led the grain and oilseed complex higher with 4% gains.

First-time claims for unemployment benefits rose to 235K in the week ending July 2, up from 231K the previous week, and above analyst expectations of 230K. That pushed the four-week moving average to 232.5K claims, up from 231.75K the previous week. Continuing claims rose by 51K to 1.375 million in the week ending June 25, the latest week available, suggesting that the tight jobs market may be starting to ease somewhat. I’ve previously mentioned that one of the unsavory jobs of the Fed to tame inflation is to get the unemployment rate to increase to reduce wage inflation. It’s too early to say for sure, but today’s data provides some evidence that we may be on that path. We’ll get more data on the employment sector tomorrow morning when the monthly jobs report is released. Analysts currently expect it to show that the economy created another 270K jobs in June, with the unemployment rate staying unchanged at 3.6%, hourly wages up 0.3% month-on-month and 5.0% year-on-year and the hourly work week unchanged at 34.6 hours.

China confirmed 94 new locally transmitted Covid-19 cases on Wednesday, along with 244 asymptomatic cases, with 54 of those cases in Shanghai and 167 in nearby Anhui. The new BA.5 variant appears to be the dominant virus currently, which spreads much more easily, and it appears resistant to China’s vaccine. Yet, Beijing now requires that people be vaccinated in order to enter public venues, excluding supermarkets, hospitals, and other essential places. Officials blame the new outbreaks on the low vaccination rate in China, which some say is a product of the zero-tolerance policy currently in place. People see less need to get vaccinated when the Covid numbers are so low. Yet, China’s vaccine has also been less effective as alternatives available elsewhere, and the latest variant seems resistant to it as well. This makes getting the vaccine a tougher sell, unless it is made mandatory, as has been done in Beijing for attending public venues. Keep in mind that the authorities know everything about your medical history in China. They know your vaccine status, and they know with whom you’ve come into contact through their tracing technology. The authorities know where you’ve traveled to, and when you’ve returned, and by which route you traveled.

China continues to work with other BRIC nations to create an alternative economy ahead of a possible move to reunify Taiwan to the Mainland. You may recall my comments regarding a little covered meeting of BRIC nations in late June, hosted by President Xi Jinping that included Russia’s President Putin, as well as leaders from Brazil and India. Discussions were held on how the countries could cooperate to meet each other’s food and energy needs. These countries are also now moving to a system of using Chinese yuan for payment for these goods, rather than the U.S. dollar that has served as the global currency. The countries are also building alternative systems to get around the SWIFT banking system that the West targeted to sanction Russia when it invaded Ukraine. India just paid for a cargo of Chinese coal with yuan, and it is buying Russian oil with yuan as well, increasing demand for the Chinese currency while avoiding the need for dollars.

The port of Constanta in Romania is using a floating crane to transfer Ukraine grain cargoes from barges arriving on the Danube River to bulk ships for export, eliminating the need to transfer through port granaries. This is expected to add greater efficiency to Ukraine exports. Ukraine exports over the past four months of the war totaled just 5.2 million metric tons, which is a fraction of the previous export pace. Ukraine officials believe that an agreement to allow shipment from its ports will not likely happen any time soon. As such, world supplies are expected to remain tight.

Grain and oilseed prices bounced with much of the rest of the commodity and equity sectors overnight. This is more technical in nature than it is fundamental, just as was the selloff that brought prices down to current levels. It’s all been about negative money flow created by worries of a global recession, and the Algos that sold the bearish momentum and broken charts. End users and bargain hunting speculators are dipping their toes in the waters. Keep in mind that the momentum trading Algos can take us up as fast as they took us down, but the markets are still feeling out whether its safe to turn the corner. Fundamentally, it looks like we have another chance for thunderstorms across the Midwest over the next day or two, before the belt trends milder and drier over the coming week to 10 days.

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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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