Perspective: Morning Commentary January 30

By: Arlan Suderman, Chief Commodities Economist

Fri, 30 Jan 2026, 14:37

Today's Perspective Video: Massive Shake-Up in China's Military: Impact on Soybeans, Trade & Markets

January 30 – Stock futures pulled back overnight, but then they rallied off their lows to cut their losses after President Trump nominated Federal Reserve Governor Kevin Warsh to head the central bank starting in May. However, this morning’s producer price inflation data sobered the bulls a bit when it was released. The VIX rallied above 19 overnight as stock futures fell, but then it dropped below 18 this morning following the announcement. The dollar index is trading near 96.6. Yields on 10-year Treasuries are trading near 4.25% this morning, while yields on 2-year Treasuries are trading near 3.55%. Crude oil prices are consolidating following yesterday’s rally to nearly six-month highs on rising tensions with Iran, while the grain and oilseed markets were mixed to weaker overnight.

The headline producer price index rose 0.5% on the month in December, up from 0.2% the previous month, and above analyst expectations of 0.2%. That’s a big miss for inflation at the wholesale level in December. Yet, the headline PPI was up 3.0% year-on-year in December, unchanged from the previous month, but above analyst expectations that it would tick lower to 2.9%. The core PPI that excludes the more volatile food and energy sectors rose 0.4% on the month in December, doubling the 0.2% seen in November, and above analyst expectations of 0.3%. The headline PPI surged to 3.7% growth year-on-year, up from 3.0% the previous month. The PPI minus food, energy, and trade services rose 0.4% on the month in December, while being up 3.5% year-on-year. This is certainly hotter inflation at the wholesale level than Wall Street wanted to see, which doesn’t boost the argument for more rate cuts.

However, those hoping for more rate cuts grounded their hopes this morning in President Trump’s nominee to replace Jerome Powell at the helm of the Federal Reserve. Former Federal Reserve Governor Kevin Warsh is well respected on Wall Street. Yes, he shares President Trump’s view of lower interest rates, but he’s also seen as someone who believes in lower rates as a matter of analysis more than political loyalty, suggesting that he wouldn’t blindly lower rates too far just to please the president. That gave courage to investors that the central bank would not be headed up by a political puppet, retaining some sense of independence. Ironically, Trump passed over Warsh to nominate Powell in Trump 1.0.

Warsh has long been respected for his understanding of the implications of central bank policy on the economy, as he was seen as an individual of wise counsel while he served as Fed Governor from 2006 to 2011. His familiarity with Wall Street executives and investors also made him a good liaison to the Street. Warsh didn’t dissent against the big bond purchases made during the Ben Bernanke tenure at the Federal Reserve, but he worried about the inflationary risks posed by that quantitative easing, which eventually proved to be true when the Fed doubled-down on that policy during the pandemic. His concerns about the inflationary risks led to his resignation from the Fed in 2011. Warsh also holds concerns about the Fed’s large balance sheet that are a product of that easing, which is also a contributor to this day to our record M2 money supply. Warsh believes that shrinking that balance sheet – draining the monetary injection – would allow it to “redeploy” the excess liquidity in the financial markets over to the real economy on Main Street by lowering the Fed’s benchmark interest rate.

Crude oil prices pulled back a bit overnight following indications that President Trump is seeking dialogue with Iran over its nuclear program, reducing the risks of a U.S. military intervention. President Trump had previously threatened military action if Iran refused to make a deal on its nuclear program. He had already positioned an armada of military ships in the Middle East to make such a military strike possible. The fear that drove crude oil prices to nearly six-month highs yesterday was the risk that a strike would destabilize the Middle East while possibly leading Iran to try to shut down movement of oil through the Strait of Hormuz, where an estimated 20% of the world’s supply passes. For now, that risk has pulled back a bit, allowing for a pullback in prices.

Weather remains a background story for the Ag commodities. Bitter cold temperatures over the past week over areas lacking sufficient snow cover put 15 – 20% of the U.S. winter wheat crop at risk of damage, although we won’t likely know the scope of any possible damage for another four to six weeks. The Black Sea Region is also expected to see readings drop below -20° F in some areas in the coming days. Most central and northern areas have sufficient snow cover to protect the wheat, but southern areas do not. Below normal rainfall continues to plague Argentine crops. Crop ratings are in decline, but they’re still well above the five-year average for late January. Recent rains provided some relief, with more expected in the 6- to 10-day period. But those rains are expected to miss the eastern third of the crop belt. That could increase U.S. corn and soybean meal exports later this year.

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Matt ZellerWed, 05 Aug 2026, 12:39

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Matt ZellerTue, 04 Aug 2026, 12:43

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Matt ZellerMon, 03 Aug 2026, 12:45

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