Perspective: Morning Commentary for June 28

By: Arlan Suderman, Chief Commodities Economist

Tue, 28 Jun 2022, 13:24

Perspective: Morning Commentary

Matt Zeller

Senior Market Intelligence Analyst

June 28 – Money flow is generally positive for both the commodities and for the equities in today’s early trade. Both sectors saw considerable liquidation due to economic concerns in recent days and weeks, so some consolidation is in order. Wall Street feels that the Federal Reserve may finally have a handle on what it needs to do to tame inflation, although it will remain a subject for debate whether the medicine is worse than the disease. Keep in mind that many traders on Wall Street are too young to remember significant inflation, or its detrimental impacts on the economy. But for this moment in time, there’s a bit of cautious optimism on Wall Street. The VIX is trading near 27 this morning, which is just above two plus week lows. The dollar index is trading firm near 104.2. Yields on 10-year Treasuries are trading near 3.22%. Crude oil prices are higher on renewed supply concerns, while the Ags are mostly solidly higher as well on bargain buying amid lingering inflation worries and supply concerns.

Fed Chair Jerome Powell admitted that the central bank was wrong about transitory inflation when he testified before Congress late last week. He also admitted that it will be difficult for the central bank to orchestrate a soft landing for the economy. Yet, he reiterated that inflation is enemy number one in the Fed’s playbook. That seemed to give comfort to Wall Street, fueling a bounce in stock prices, with money flow turning positive again for most of the commonly followed commodities as well. The medicine being dosed out to tame inflation is higher interest rates and a shrinking of the Fed’s balance sheet – withdrawing stimulus from the economy. Wall Street is worried that the Fed may raise interest rates too high, triggering a recession. But the fact is, you’d be hard-pressed to find a time when inflation was tamed with negative real interest rates. Interest rates need to be pushed above the rate of inflation to tame it, and the Fed is far behind the curve for doing so, suggesting that we could see strong inflation pressures for some time yet. The sad part of it is that the Fed is more aggressive in just about every other significant central bank in raising rates, so this is a global problem.

Yes, the medicine will inflict a degree of harm on the economy. That’s what it has to do in order to tame inflation, just as chemo treatments inflict harm on the body to tame cancer in the body. That’s why we want to start treating cancer early, so that less treatment is potentially needed. That’s why the Fed needed to act quicker to tame inflation, so that less medicine was needed. But that didn’t happen, and the inflation became well-engrained in the economy, spreading throughout it. So, is the medicine worse than the inflation? No, inflation is a serious disease that has serious longer-term consequences for the economy. It must be tamed at all costs, which is what led Paul Volker to drive interest rates toward 20% to quickly deal with it more than four decades ago. The problem is, we have a lack of leadership at both the fiscal and monetary policy level currently – individuals more interested in being seen as the kind doctor that tells us what we want to hear, rather than the truthful doctor that tells us what we need to hear.

China is reopening, following its recent round of Covid lockdowns, as described in today’s edition of China Direct, published by Ivy Li in our Shanghai office. It shortened its quarantine period for international travelers from 14 days at a centralized location and 7 days at home, to 7 days at a centralized quarantine center and 3 days at home. It’s reopening theme parks, restaurants, and stores, although the reopening is generally being phased in. People are still being cautious, not wanting to test positive, necessitating renewed quarantine restrictions. Nonetheless, consumer demand for energy, goods, and services is expected to ramp up again. This allows supply chains to function a bit better, but it also increases demand, helping to fuel inflation again.

USDA reported lower corn and soybean ratings again this week as weather takes its toll on the Midwest crops. Corn and soybean prices, along with wheat, plummeted last week as weather forecasts looked a bit more favorable. My corn yield model puts the U.S. corn crop at 177.2 bushels per acre, based on this week’s crop ratings, which is very close to USDA’s yield of 177 bpa. I don’t put a lot of confidence in late June yield models, but it does suggest that USDA’s current estimate is probably pretty close based on current conditions. But again, the key time for the corn crop weatherwise is July, while August is the critical month for soybeans. The latest long-range ECMWF European model run covering the period July 11 to August 11 shows normal to above-normal rainfall for Indiana, Ohio, and Michigan, while much of the rest of the Midwest and Plains crop belt has a dry bias, with the entire region expected to have above normal temperatures. Confidence in forecasts more than 10-days out is low, so take this with a grain of salt. But it does suggest that the models continue to pick up signals in the atmosphere that we could see problems for both the corn and soybean crops during this critical reproductive time. Does this mean that the market will automatically go into a bull run? Not necessarily. But it does suggest that the risks remain with us, and that they must be respected until we have a better handle on how weather patterns are going to play out for the critical reproductive period. A lot of news will move the markets in the days and weeks ahead, but weather through the next 45 days will be the primary factor shaping the longer-term balance sheet.

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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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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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Morning Grain Comments 8-6

Morning Grain Market Comments - Matt Zeller

Matt ZellerThu, 06 Aug 2026, 11:56

Grains & Oilseeds

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