Perspective: Mid-Day Commentary for October 10

By: Arlan Suderman, Chief Commodities Economist

Fri, 10 Oct 2025, 16:51

Today's Perspective Video: What USDA Won't Say

October 10 - The Nasdaq led stocks sharply lower following a Trump social media post promising significant tariffs on Chinese goods after actions that it took to restrict rare earth minerals and magnets from being exported to other countries of the world, including the United States. The VIX jumped to a 15-week high above 22 following the past, as stocks tumbled, although it has since eased back to trade near 20. The dollar index dropped to trade near 98.9. Yields on 10-year Treasuries are trading near 4.06% after posting three-week lows, while yields on 2-year Treasuries are trading near 3.52%. Crude oil prices are trading more than 4% lower at new five-month lows below $59 per barrel, while soybeans are leading the grain and oilseed complex lower. Soybean exports are most impacted by this escalation, but the Algos are selling across the board, with all three wheat markets posting new contract lows today.

President Trump sees no reason to meet with Chinese President Xi after actions taken by China in the past 24 hours as China's relationship with the United States falls to a new low. I noted in yesterday's commentary that China had increased restrictions on exports of rare earth minerals and magnets essential for the production of most electronics, including everything from cell phones to airplane engines to radar to today's advanced defense weapons. This came on top of port fees for American owned or operated shipping companies, but the rare earth minerals move continues to be the "trump" card that China is playing. I've been trying to emphasize that this is a "huge" deal.

Trump put a lengthy post on Truth Social late morning detailing out the impact of that move, including how it basically effects every country in the world. Trump stated that the United States has been contacted by other countries who are "extremely angry" at China's move, which caught them by surprise. I would argue that it shouldn't have, as China has been building toward this for years as the rest of the world allowed China to garner control of 90% of the processed rare earth minerals and magnets available worldwide. Nonetheless, this is where we find ourselves today. President Trump highlights how China is now holding "the World 'captive'" with this move, which is something that I've been sounding the alarm on for some time.

President Trump then goes on to explain how the United States still has some moves of its own to make in response, and that he has little choice but to do so now. The meeting with Xi appears to be off later this month. He goes on to say that he is now "forced" to use some of the tools that he's been holding back to financially counter this move. He says, "for every element that they have been able to monopolize, we have two. I never thought that it would come to this but perhaps, as with all things, the time has come. Ultimately, though potentially painful, it will be a very good thing, in the end, for the U.S.A. One of the policies that we are calculating at this moment is a massive increase of tariffs on Chinese products coming to the United States of America. There are many other countermeasures that are, likewise, under serious consideration."

That is a statement reflecting further escalation, and significant escalation. One can argue that the tariff war triggered this, and it would be naive to say that it wasn't a contributor. But China and the United States have been on this path for years, once Xi stated that it was their intention to topple the United States as the top economy and military of the world. We were eventually going to get to this point. The primary question was, by what path would we get here? Now that we're here, it is becoming increasingly evident that China is no longer a destination of significance for U.S. commodities without a significant change in these dynamics. China has been investing in Brazil agriculture and infrastructure for years, preparing for the day that it would not need the United States. That day has come.

In related news, financial assistance to farmers appears to still be in the works as we've previously indicated this week, but not while the government is in partial shutdown mode. I see more people talking about the $13 billion figure, with primary focus on soybean farmers, but many other commodities are expected to be included as well. In fact, I continue to hear talk of one or more additional packages to come out of Congress in the months ahead. These aid packages tend to slow farmer selling of commodities, which tends to strengthen basis, while it can also have an impact on futures as well.

Consumer sentiment stabilized in October, according to preliminary survey data, although today's news may impact the final numbers when they come out later this month. The preliminary consumer sentiment index for October is 55.0, roughly matching the 55.1 posted in September, while being notably down from 70.5 a year ago. The current economic conditions index firmed slightly to 61.0, up from 60.4 in September, but down from 64.9 a year ago. The index of consumer expectations slipped to 51.2, down a bit from 51.7 last month, but notably lower than the 74.1 posted a year ago. Again, today's headlines may put additional downward pressure on the month's final sentiment numbers, depending on how this plays out, which may accelerate rate cuts from the Federal Reserve as well, although some will argue that President Trump's response will be inflationary - and to some extent that's true. Nonetheless, current survey results held long-term inflation expectations steady at 3.7%, with year-ahead inflation expectations easing slightly to 4.6%. Today's developments certainly increase the uncertainty in the economy, which is reflected in most of the markets today.

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