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Perspective: Morning Commentary for June 17

By: Arlan Suderman, Chief Commodities Economist

Perspective: Morning Commentary
 
Matt Zeller
Senior Market Intelligence Analyst
Matt.Zeller@stonex.com

June 17 – Stocks are set to recover at least a bit of ground today with futures pointing to a higher open, after the Dow Jones dropped over 700 points yesterday and dipped below the 30k mark for the first time since late 2020. The DJIA is down over 3,200 points since last Tuesday and -18% on the year so far, with the S&P 500 off 23% in 2022 as well. Rampant inflation and rising interest rates have the equities trade fearing a recession and eyeing disasters in crypto and credit markets.

 

Economic data slows down a bit into the end of this week but includes May Industrial Production and Capacity Utilization from the Federal Reserve, as well as the Conference Board’s Leading Index, all in the 8:15-9:00 AM central time range. Next week will bring further readings on jobless claims and home sales, with that latter reading likely an important one following disappointing housing starts and building permits figures yesterday.

 

Notable developments have been few and far between in the Russia-Ukraine war; fighting seems at a stalemate while various countries are still working to get Ukrainian grain reserves exported out of the country by any means. Exports remain slow compared to pre-war levels; the country exported just 695k tonnes in the first 16 days in June, down 43.5% from the same span a year ago. Ukraine exported around 6 MMT per month before the war. The European Commission has recommended Ukraine for candidate status in the E.U., with a decision likely next week; UKR President Zelensky cheered the move to align his country with Europe and away from Russia…

 

WTI crude oil was trading higher into the early morning hours but has settled back since, down around 50 cents per barrel at the time of this writing. Crude has moved off highs from earlier this week but remains within striking distance of there and the $120/bbl mark, still working on a higher high and low thus far today. The U.S. slapped some sanctions on Iran, China, and the Emirates yesterday in hopes of reviving a nuclear deal, while Libyan oil output lags, Russia remains hamstrung, and world demand is still seen rising over 2% in 2023 by the IEA.

 

Current National Weather Service forecasts below for the 6-10 and 8-14 day time frames, as well as their current seasonal outlooks for July and the July-August-September stretch, show why grain traders are loathe to hold short positions into the weekend, especially an extended holiday one in this instance. King corn has been on a solid run since June 1 lows, punching through technical resistance this week with fears of hot and dry weather now stretching into July. Of course, we’ve seen forecasts turn quickly before – on the flip side of the long weekend, that gives said forecasts an extra day to evolve. Profit-taking will be swift and severe if the trade starts to see evidence of any type of cooler and wetter July for corn pollination.

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