Perspective: Morning Commentary for February 29

Perspective: Morning Commentary
Arlan Suderman
Chief Commodities Economist



Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst


February 29 – Dow Jones futures reversed course to indicate a higher open this morning following the release of PCE index data for January; the lack of a surprise there encourages the trade, even if it’s unlikely to budge the Fed from their cautious outlook in early 2024. We’ve seen three straight minor losing session by the Dow this week but values remain very near last Friday’s record high, and the benchmark index is set to post its biggest gains for Jan-Feb since before the pandemic. Volatility remains low with the VIX down and trading below 14.


Initial jobless claims for the week ending February 24 came in at 215k, above the average 210k trade estimate, with the previous week revised slightly higher as well (from 201k to 202k). Continuing claims for the previous week also came in above estimates at 1.905 million, up from the average 1.875 mln guess and 1.860 mln the week prior. It would appear that U.S. employers are cutting back on hiring but also not laying off workers; the labor market has remained pretty strong even through the interest rate run-up.


Personal income for the month of January rose by an even percentage point from December, ahead of the average 0.4% expectation and 0.3% in Dec; personal spending matched estimates at 0.2% in Jan, down from 0.7% in Dec. The PCE Core Deflator rose 0.4% month-over-month and 2.8% year-over-year, matching trade estimates, with the MoM reading ticking higher compared to December – that does little to calm the fears of the Federal Reserve using caution before bringing interest rates back down in 2024, with preferred inflation measures proving sticky still.


U.S. exporters sold just 5.9 million bushels of soybeans on the week ending February 22, after a marketing-year low 2.1 mbu sales total the week prior. China was the leading buyer at just 5.7 million bushels, but 14.4 mbu were cancelled out of the “unknown” category for the second straight week. Cumulative sales to China stand at 813 mbu through right around half the 2023/24 marketing season, down from 1108 mbu last year, with soybean sales to all destinations at 1434 mbu, down from 1778 mbu LY. Seasonally, overall soybean export sales are now 29 mbu or 2% behind the pace needed to meet the current USDA estimate, and that number is falling rapidly. Soybeans are down double-digits this morning after failing to hold at matching lows from two of the last three sessions; we’ve had a period of high prices since late 2020 but it’s now looking like a return to the level of the six years prior, when spot soybeans hung generally in the $8-11/bushel range through a series of strong crops…


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