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Perspective: Morning Commentary for November 19

By: Arlan Suderman, Chief Commodities Economist

Perspective: Morning Commentary
 
Arlan Suderman
Chief Commodities Economist

November 19 – U.S. equities markets are mostly looking to start lower this morning on the resurgence of COVID concerns, despite strong corporate earnings throughout this week and the U.S. economic recovery generally continuing as planned. Economic releases are mostly non-existent today and Congress is still debating the infrastructure package, while the President has yet to unveil his pick for the next Federal Reserve Chair.

 

A couple developments on the COVID-19 front this morning, one on each side the ledger; on the positive side, the U.S. Food and Drug Administration has approved the Moderna COVID booster shot for all U.S. adults (18 years and older). That fulfills President Biden’s wishes to get the general public extra doses heading into the winter, though around two months after the administration originally planned that move. Pfizer’s booster shot is likely to be authorized soon as well. It is now up to the CDC to authorize distribution of the vaccine, and they will meet today to review the new data. Public health experts are expecting an increase in COVID infections in the winter months, as indoor holiday gatherings increase. Nearly 80% of Americans have received at least one jab of a vaccine from one of the three manufacturers, and over 31 million Americans already received a booster.

 

On the negative side, a new wave of COVID cases is pounding Europe – Germany broke a record with more than 65,000 new cases reported yesterday, and officials warning that actual cases could be 2-3x that number. Both the Netherlands and France reported over 20k cases on Wednesday with new waves of cases increasing, and the Netherlands and Austria instituted partial lockdowns. Belgium re-introduced indoor mask and work-from-home mandates as well.

 

The U.S. dollar index very clearly tested Wednesday’s highs this morning (the highest levels since last summer) and was rejected at least temporarily, but the index against a basket of global currencies is still almost 500 points higher as of the time of this writing and creating some major headwinds for the commodities into the end of the week. WTI crude oil has put in some ugly action over the past eight sessions, staring its second bearish outside reversal during that time squarely in the face; crude is around $2.50 per barrel lower as of the time of this writing and sits around $9/bbl off recent highs.

 

Grain market action has been up-and-down as of late but the trade has no problem taking some profits this morning, reversing course from highs in the late night hours, and still at relatively strong overall price levels. Demand data should be thinner today and we’re likely heading into a slow holiday week as well, but margins are strong for end users throughout, and said crushers/processors/plants are taking advantage of massive 2021 supplies, willing to pay a premium to farmers to open those bins through the cold winter months…

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