Perspective: Morning Commentary for May 12

By: Arlan Suderman, Chief Commodities Economist

Fri, 12 May 2023, 13:06

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 12 – Wall Street enjoyed a bit of a “risk-on” sentiment this morning as regional bank shares stabilized, easing concerns on the Street. The VIX slipped below 17 in early trade, reflecting a contentment spreading across Wall Street this morning. The dollar index rallied to a fresh 10-day high near 102.3. Yields on 10-year Treasuries are trading near 3.41%, while yields on 2-year Treasuries are trading near 3.92%. The broader commodity sector is also firmer on the morning’s “risk-on” sentiment, with crude oil prices modestly higher in early trade. The grain and oilseed markets are mixed to firm ahead of today’s highly anticipated USDA WASDE crop report, with little movement in corn and soybean prices, but more substantial gains seen in the Kansas City and Minneapolis hard red wheat markets on expectations that USDA will print a small production number today due to this year’s weather problems that could further tighten the balance sheet.

New loans in China fell sharply in April to CNY 718.8 billion, according to the People’s Bank of China, which was only about half the total expected. The steep decline in loan growth signals a reluctance to invest in this time of uncertainty, spelling trouble for China’s economy. Sharp declines in loans to both corporations and in residential lending reflected the broad weakness in China’s economy, and possible more significant problems continuing in China’s property sector. Pressures are growing for China to initiate a more significant stimulus program, but that could significantly devalue the yuan at a time when the dollar is stronger due to our monetary tightening, with the same being true of Europe. The bottom line is that the Chinese people do not have confidence in China’s economy, and the timing is very poor for the government to initiate stimulus, while trying to prop up the yuan at a time when it is trying to move the world toward favoring this currency over the dollar.

Mixed signals came out of Russia today regarding the possible extension of the Ukraine grain initiative. Russian news agency TASS reported earlier that its sources suggest that a 60-day extension will likely be announced today. But that contradicts comments coming from the Kremlin, which continued to hold to the hard line of recent weeks. It shouldn’t be a surprise that negotiators would hold a hard line down to the eleventh hour of the negotiations to get as much out of the talks as possible, and these talks could still fall apart. But the comments from TASS raise a sense of optimism that we will once again see another extension of the grain initiative. We will still expect to see efforts to move grain regardless of whether we get an extension, but the cost of doing business would be expected to go up. Insurance coverage for shippers is generally the most limiting factor, and insurance coverage comes down to how much is a shipper willing to pay to keep coverage. I anticipate that we’d see some type of compensation package for coverage emerge. Obviously, those costs would rise further if there would be an unfortunate incident with a cargo in the region, necessitating those shippers to again reassess the cost: benefit. But there will continue to be grain available to be shipped for the one willing to pay the costs of the risks associated.

Little of this matters though to U.S. grain traders this morning ahead of USDA’s massive May WASDE crop report due to be released at 11 a.m. Chicago time today. This will be the first crop report of the year containing USDA’s official balance sheets for the new 2023-24 marketing year. The potential for market-moving surprises is large. Traders know that the wheat crop is small due to a drought in the Plains, and they know USDA’s general intentions for corn and soybean acreage and yield on the supply side of the balance sheet. But how will USDA craft the demand side of the balance sheet for the grain and oilseeds? That will likely be the area where we’ll see the most potential for surprises – in either direction. That is what will set the tone for the growing season ahead.

China already released its new-crop balance sheets this morning. It raised this year’s corn planted area by 0.9%, while raising expected yields by 0.9% as well, resulting in a 282 million metric ton crop. Domestic demand for corn was also raised by 0.9% to 293 mmt, leaving an 11 mmt deficit to be filled with imports of 17.5 mmt, down from 18 mmt in the current year. Soybean area is also expected to increase this year, but by a more substantial 2%, with soybean yields up 3.8%, producing a 21.46 mmt crop. Domestic use is expected to remain flat near 95 mmt, reducing imports by 1 mmt to 94.2 mmt as soymeal inclusion in rations is reduced, as I’ve previously addressed in this column. The reality here is that Chinese import demand for corn and soybeans is flat to lower, at a time when Brazil is rapidly increasing the production of both, and tensions are escalating between China and the United States. It’s not difficult to see how this spells future problems for U.S. exports to China.

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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

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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

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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

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