Perspective: Morning Commentary for September 13

By: Arlan Suderman, Chief Commodities Economist

Mon, 13 Sep 2021, 13:39

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

September 13 – Stocks attempt to regain a share of Friday’s losses this morning as traders wrestle with fears of tapering amid rising inflation pressures against what was a strong corporate earnings season. Traders also worry that the Administration’s $3.5 trillion spending package will be loaded with corporate taxes that could slow economic growth. The VIX pulled back modestly from Friday’s surge to three-week highs to trade near 19 this morning, while the dollar index trades near 92.8 after hitting more than two-week highs overnight. The strength in the dollar added headwinds for U.S. grain and oilseed prices overnight, which already face seasonal harvest pressure. Yields on 10-year Treasuries are trading near 1.33% in early trade. Crude oil prices pushed to nearly six-week highs this morning, while the Ags were mostly weaker to start the week.

The Federal Reserve has a problem – inflation. It told us that inflation would be transitory, lasting a couple of months, as supply chains start to function again after the economic shutdown. Yet, Friday’s data showed year-on-year inflation exceeding 7% at the wholesale level, which means that consumers still have more inflation to face. The Bureau of Labor Statistics reported that the final demand index rose 8.3% year-on-year in August, which was its largest advance since it began calculating it in 2010. Demand is driven by money supply. Inflation data at the consumer level is scheduled for release tomorrow morning. This data will be discussed when the Federal Open Market Committee meets to discuss potential changes to its monetary policy next week. Federal Reserve Chair Jerome Powell continues to hold a dovish line regarding monetary policy, but many of his board members are expressing concern over this perpetual inflation that takes a toll on consumers, and on the economy.

China has another Covid outbreak. Keep in mind that one positive case is considered an outbreak that must be stamped out in China, which has allowed it to remain relatively Covid-free over the past year. This latest outbreak produced 22 official cases yesterday in the Fujian province, with total cases topping 60. The Fujian province is located in southeastern China across from Taiwan, which includes a number of port facilities. Look for another round of lockdowns in the province, and anywhere else where cases may escape to in the coming days as China tries to eliminate the virus once again from within its borders. That is expected reduce energy consumption, as well as meat consumption, within the region based on our experience with past lockdowns. China’s zero-tolerance policy has been very effective at managing the virus to this point, although at a cost to domestic and global consumers. Yet, the characteristic of the virus, and China’s position in the global trade world, mean that it will continue likely see this cycle play out over and over again in the months ahead. The ongoing risk will be that a particular variant of Covid-19 becomes impossible to keep contained, resulting in a broader or national lockdown, but thus far we’ve not seen any evidence of such.

The Centers for Disease Control reported 162,179 positive Covid-19 tests on Friday, the latest date for which data was available this morning, down from the week’s high of 171,927. Last week’s high was down from the previous week’s high, which was down from the high set the week prior to that at 187,165 positive tests. The seven-day moving average on Friday slipped to 135,749 positive tests, which was at its lowest level since August 15^th. Unfortunately, Covid-related deaths continue to rise. The CDC reported 1,860 Covid-related deaths on Friday, which was its highest reported daily total since February 19, with the seven-day moving average at 1,182 deaths.

Friday’s USDA report produced a bounce in corn and soybean prices, but it did little to produce a change in sentiment. Corn and soybean supplies are perceived to be adequate – not in abundance, but also not tight enough to justify rationing of demand with higher prices. The margin for error remains small, but it is still present. The longer-term current trend is lower, and the trade didn’t see anything in Friday’s numbers to suggest that the fundamentals would force a change in the trend near-term. The trade believes it has a handle on the size of the crops until proven otherwise, which puts the focus on the demand side of the ledger. We’ll see USDA’s weekly export inspection report later this morning. It’s expected to reflect ongoing problems at the ports of New Orleans. Three of the 10 notable export terminals are open, with export capacity probably close to 20% of normal currently. Power remains the big problem keeping more capacity shutdown. We anticipate seeing the situation improve this week, but delays continue to build on delays. We look for exports to work hard to pull grain through, especially soybeans, once power is restored, but that has thus far not occurred.

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

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Mike CastleTue, 04 Aug 2026, 14:58

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