By: Arlan Suderman, Chief Commodities Economist
June 17 – Stock futures consolidated overnight in relatively quiet trade. It’s Fed Day on Wall Street as war headlines begin to calm, with investors focused on this afternoon’s statement and press conference from the Federal Reserve after incoming Chairman Kevin Warsh chairs his first set of policy meetings. The VIX is still trading near 16 this morning, while the dollar index trades near 99.6. Yields on 10-year Treasuries are trading near 4.43%, while yields on 2-year Treasuries trade near 4.06%, as the yield curve continues to slowly flatten amid lingering inflation worries. WTI crude oil dropped to a fresh 15-week low this morning at $74.59 per barrel, before bouncing to trade near $77 per barrel, while Brent trades near $80 per barrel. The grain and oilseed sector was mostly firmer overnight, with wheat prices leading the way higher amid adverse European weather.
Retail sales rose 0.9% month-on-month in May, more than doubling the 0.4% growth rate seen in April, and well above the 0.5% pace expected by analysts. Retail sales growth excluding vehicles was also strong at 0.8%, up from 0.7% in April and above the 0.5% pace expected by analysts. But those numbers would be expected to be strong considering the sharp rise in gasoline prices, so what are they if we exclude gas prices? Retail sales excluding both vehicles and gasoline rose a solid 0.5% month-on-month in May, matching the April pace, but slightly above the 0.4% growth rate expected by analysts. So the bottom line is that retail sales growth remained solid in May, despite rapidly rising energy prices – not spectacular, but still very solid.
President Trump told G-7 leaders that the ceasefire agreement reached with Iran is not final, but rather it is a memorandum of understanding to continue talking, while reopening the Strait of Hormuz. Trump stated that he will restart bombing of Iran at any time if he doesn’t like where things are going. Chinese Foreign Minister Wang Yi stated something similar after Pakistan updated the Chinese government on the agreement, re-emphasizing that this agreement is far from an endpoint, and that considerable work must still be done to achieve lasting peace in the region. Yet, the crude oil markets fell to 15-week lows this morning suggesting that the energy markets assume that supplies will soon be back to normal. That couldn’t be further from the truth. It is expected to be many months – into next year at least – before energy flows through the Strait of Hormuz are restored to pre-war levels, meaning that global deficits will continue to build in the meantime. And that assumes that the fighting actually does stop, and that the Strait of Hormuz does open and remain open. Meanwhile, G-7 leaders stated this week that they intend to work toward re-routing energy flows to reduce their dependency on the Strait in the future. It was long believed that Iran did not have the naval power to actually close the Strait – and it doesn’t. But Iran showed over the past several months that it doesn’t need a naval force to shut down the Strait – just the threat of a tanker or freighter being hit by a missile or drone. We must all keep in mind that many of the most contentious issues with Iran have not yet been settled, and they likely won’t be anytime soon, leaving the door open for escalation again at any point. That keeps risks high for both energy and fertilizer heading into the last half of 2026.
The Federal Open Market Committee will end two days of meetings early this afternoon with the release of its revised monetary policy statement, followed by a press conference with Chair Kevin Warsh 30 minutes later. No change in the Fed’s benchmark interest rate is expected, but the primary focus will be on possible wording changes in the policy statement reflective of changes in sentiment for the Warsh era, as well as any possible wording changes that might suggest that the central bank is switching from a period of rate cuts to a period of rate hikes. Analysts and observers will also be searching the document and listening to answers in the press conference seeking any senses as to unity in the committee under Warsh’s leadership. Warsh previously served on the FOMC, but his appointment by Trump reportedly had some members wary of him. He’ll have to re-earn their trust. Furthermore, observers will be looking for hints of changes that we can expect going forward in how the Fed operates. Warsh is said to believe that a successful Fed is one that nobody talks about because it operates very quietly in the background. That likely means fewer public economic predictions, and no more dot plots.
Grain and oilseed prices surged on the day session open yesterday, spurring speculation of China involvement. I stated last week that the recent price break would be a great opportunity for any end user to get some coverage, including China if it intends to keep its promises for the upcoming marketing year. Trade chatter indicates that Chinese buyers were testing the waters in the new-crop soybean market yesterday, and possibly other markets as well. USDA confirmed the sale of 13.7 million bushels of soybeans to “unknown destinations” overnight, with 11.5 million bushels of that total for the 2026-27 marketing year. We don’t know that is China, but many in the market will assume so, making speculators think twice before building short positions near-term.
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Improving crop conditions across Europe have eased immediate supply concerns, but weather remains a critical variable for grain markets. Recent rains have supported crop recovery, yet shrinking maize acreage and renewed heat risks suggest production forecasts may still face meaningful challenges in the months ahead.
June 17 – Stock futures consolidated overnight in relatively quiet trade. It’s Fed Day on Wall Street as war headlines begin to calm, with investors focused on this afternoon’s statement and press conference from the Federal Reserve after incoming Chairman Kevin Warsh chairs his first set of policy meetings. The VIX is still trading near 16 this morning, while the dollar index trades near 99.6. Yields on 10-year Treasuries are trading near 4.43%, while yields on 2-year Treasuries trade near 4.06%, as the yield curve continues to slowly flatten amid lingering inflation worries. WTI crude oil dropped to a fresh 15-week low this morning at $74.59 per barrel, before bouncing to trade near $77 per barrel, while Brent trades near $80 per barrel. The grain and oilseed sector was mostly firmer overnight, with wheat prices leading the way higher amid adverse European weather.
June 16 – Stock futures traded quietly mixed overnight as investors focus on this week’s meeting of the Federal Open Market Committee – the first to be chaired by Kevin Warsh – and as traders monitor the anticipated move toward peace in the Middle East. The VIX is again trading near 16 this morning, while the dollar index trades near 99.6. Yields on 10-year Treasuries are trading near 4.45%, while yields on 2-year Treasuries are trading near 4.06%. Energy prices continued their slide on the move toward an anticipated reopening of the Strait of Hormuz, with WTI crude oil trading below $78 this morning, while Brent trades near $80 per barrel. The grain and oilseed sector was generally weaker as well, with the exception of a bounce in Chicago wheat prices due to adverse weather impacting production in Europe.
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