Perspective: Morning Commentary for September 24

By: Arlan Suderman, Chief Commodities Economist

Fri, 24 Sep 2021, 13:28

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

September 24 – Stocks pulled back overnight, with the focus again on China’s Evergrande, along with its intensified crackdown on crypto currencies. The VIX firmed back above 20 overnight, as stock futures traded in the red, while the dollar index pulled back a bit from Thursday’s nearly five-week high. Yields on 10-year Treasuries traded near 1.43%, after setting a new 12-week high above 1.45% in overnight trade. Crude oil prices traded both sides of unchanged in quiet trading overnight, but they still managed to post new seven-week highs in the process. This week’s markets show a lot of signs of the market trading inflation worries, but the Ags slipped weaker anyway overnight as the fall harvest gains momentum.

Global investors are still in the dark over the fate of China’s Evergrande Group after bondholders report that they did not receive payment due to them on Thursday. A series of rumors and news stories emerged this week indicating that Evergrande had reached an agreement with bondholders to make a payment. Other reports circulated on Wall Street that the Chinese Communist Party was finalizing a restructuring deal for Evergrande that would split it into three separate entities, while protecting domestic stakeholders. The above gave a sense of confidence to global investors that China was / would intervene to avoid a broader contagion from a possible collapse of the massive real estate company. However, there are reports this morning that the above agreement to make payment was largely with domestic bondholders, while China may not feel the same urgency to deal with the firm’s obligation to western stake holders. As such, nerves are elevated this morning. Evergrande reportedly has 30 days to make good on its agreement before being considered in technical default. China is walking a fine line with Evergrande. It’s trying to interject discipline on the heavily leveraged industry, but it also must avoid social unrest at a time when China’s property market accounts for 40% of the nation’s household wealth. China’s central bank injected more cash into the banking system today, but the government otherwise remained silent about Evergrande.

China intensified its crackdown on crypto currencies today, banning all crypto transactions and crypto mining. The CCP made its opposition to crypto currencies quite clear today, with 10 different agencies working together to stamp out the crypto currency market within its borders. The People’s Bank of China reportedly will not allow any Chinese individual or company to deal in crypto on the international market, nor are they allowed to use crypto in business transactions. China has not officially stated its reasons for its opposition to crypto currencies, but a couple of reasons are obvious. First, mining for crypto currencies requires a tremendous amount of electrical power, which is in short supply in China currently. Second, China wants the yuan to eventually become the global currency of choice – a position the dollar now enjoys. Emergence of a crypto currency for international trade that it cannot regulate makes that less likely.

Power shortages are becoming widespread in China this week, with notable implications for agriculture. Many soybean crushing facilities were shut down to preserve power as part of a national effort to conserve electricity. Hunan province asked people to reduce lighting for landscaping, while commercial businesses were asked to shut down large commercial advertising screens. Power demand exceeded the supply by 30% in Hunan as the region deals with unseasonable heat. There were also reports that China may be trying to clean up air pollution by reducing the power supply. Whatever the reason, the power shortages are creating quite a disruption for industry, including the crushing industry. Meanwhile, authorities are trying to keep fertilizer facilities – big users of power – going to avoid negatively impacting food production longer-term.

The Fed appeared quite reluctant to taper following this week’s meeting – at least that seemed to be the position of Fed Chair Jerome Powell. I’m still looking forward to seeing the minutes of this week’s meeting to be released in three weeks, because the famous dot plot graphic showed signs of growing discontent with the central bank’s easy money policy. Yet, Wall Street interpreted this week’s Fed communications as more dovish that it had feared, resulting in a surge in stocks, while also anticipating even greater inflation pressures as easy money continues to flow. Commodity traders seemed to dismiss bearish news to buy the sector. That included the energy and the Ag commodities for the most part, even though the Ags are moving into a seasonally difficult time with harvest gaining momentum. I wouldn’t say that the Ag commodities are bullish currently. We don’t have any known fundamentals to justify that position. But the breaks are certainly being bought by end users and speculators alike thus far.

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Perspective: Morning Commentary for August 6

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Mike CastleThu, 06 Aug 2026, 13:24

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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