Perspective: Mid-Day Commentary for October 16

By: Arlan Suderman, Chief Commodities Economist

Thu, 16 Oct 2025, 15:56

Today's Perspective Video: Ag Markets Feel the Strain

October 16 - A bit of a "risk-on" sentiment supported the broader markets through much of the morning, although weakness returned in the past hour. Stocks added gains today on strong bank earnings and on continued optimism over artificial intelligence and its impact on the economy, even as the VIX firmed to trade closer to 21. The dollar index remained under pressure today, slipping lower to trade near 98.5. Yields on 10-year Treasuries are trading near 4.02%, while yields on 2-year Treasuries are trading near 3.48%. Crude oil prices are trading quietly weaker today, while the grain and oilseed complex is mostly higher, led by solid gains in soybeans. China isn't buying soybeans yet, but yesterday's domestic crush data was much stronger than anticipated, and Indonesia is now considering a 1% sustainable aviation fuel blend by next year, adding to demand for biofuel feedstock.

The National Oilseed Processors Association reported Wednesday that its members crushed 197.9 million bushels of soybeans in September, up from 189.8 million the previous month, and up from 177.3 million bushels in the same month last year. The total came in above the highest trade guess and more than 11 million bushels above the average trade guess, reflecting robust crush activity in September as crushers took advantage of weak soybean basis and surprisingly strong soymeal demand to increase crush activity. USDA's target for this soybean market year is 2.555 billion bushels. NOPA crush typically accounts for roughly 95% of total crush activity. The September total is more than 10 million bushels above the seasonal pace needed to hit USDA's target, as shown below.

Persistent rains in some of China's primary crop producing regions are creating challenges for farmers at the time of harvest and winter wheat planting. Feed producers in north China are increasing demand for wheat due to concerns about a deterioration of corn quality due to mold and sprouting. The new demand for wheat demand pushes its price upward versus corn. Much of China's corn is harvested and air dried, but the persistent rains make that difficult. Corn harvest progress in China is near 50%, while soybean harvest progress is near 70% currently. The bulk of China's domestic soybean production goes for human consumption. The rains have also delayed planting of the winter wheat crop by a week or two, depending on location, but an anticipated shift in the weather pattern should still allow the crop to get planted. Dry weather is the concern in Russia, where farmers are also trying to plant the winter wheat crop. Showers are improving conditions, but farmers are still expected to reduce acreage planted by up to 6% due to poor winter wheat economics.

Soybean traders continue to hold out hope that President Trump will talk on the sideline of the APEC meeting in South Korea at the end of this month, and that the conversation will focus on reaching an agreement for China to purchase U.S. soybeans. China has most of its soybean needs booked through November, but we estimate that it has nearly 10 million metric tons (367 million bushels) of needs to fill before new-crop Brazilian supplies would be expected to start arriving. That's less than half (44%) of what it imported from us in the previous marketing year, but it would still be quite supportive for U.S. soybean demand, considering the strong biofuel domestic demand in place. I'm hopeful that such an agreement is reached in a couple of weeks, but I remain skeptical, considering developments of the past week that have dramatically strained relations between China and the United States.

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