By: Mike Castle, Market Intelligence - Fertilizer Analyst
October 13 – Stock futures are pointing to a mixed open as the tech sector sells off both in the U.S. and Asian markets amid a fresh round of AI jitters ahead of upcoming third quarter earnings season. The big banks are kicking off that earnings season today, with mixed results thus far as Goldman Sachs showed a huge earnings beat with its second-best quarterly revue on record, though JPMorgan Chase had a headline earnings miss, taking out some momentum. Traders will continue parsing through this morning’s data and reacting in turn, with more big earnings reports on deck in the days ahead. The VIX is off to a relatively muted start, holding near 15.3 at the time of writing. The dollar is giving back yesterday’s gains as it trades 0.35% lower at the time of writing to hang near 102.2 after closing at a fresh 18-month high on Monday. Treasury yields are mixed as trade resumes, with the front-end of the curve higher and long-end lower this morning, as 2-year yields rise back near 4.80% but 10-year yields fall to 5.206%, and 30-year yields fall to 5.559%. Crude oil is quietly lower to start the day, with nearby WTI down 0.3% on the day to trade near $92.90 and nearby Brent down close to 1% to trade near $105.60. The ags are quietly mixed, with selling pressure seen overnight but fresh escalations in the Black Sea that we’ll dive into below providing support.
IMF raised their forecast for global economic growth to 3.1% in 2026, up from the 3.0% seen in July, with notable increases in Europe and India more than offsetting declines in Russia and the Middle East. They noted that the large-scale releases of strategic reserves has helped blunt disruptions to the Strait of Hormuz, with said disruption only shaving 0.3% off anticipated growth in 2026, noting that it could have been three times that if not for such measures being taken. With that said, the IMF noted that their growth outlook could erode further if the conflicts in the Middle East or Black Sea continue to escalate. Global growth is still expected to rebound to 3.4% in 2027, holding steady with their previous July estimates. There was some shifting around regarding where that growth will come from, with the U.S., China, and India all revised higher while Russia, Latin America, the Middle East / Central Asia, and the U.K. all saw slight downward revisions.
IMF Chief Economist Silvana Tenreyro did warn that 2027 growth could be “materially lower” and inflation “significantly higher” under a scenario in which sustained higher commodity prices and concerns regarding sovereign debt cause a reassessment of borrowing risks, noting that keeping publicly held debt on a “sustainable path” could prevent this scenario from playing out. The IMF also noted that the global buildout of AI has helped the economy offset geopolitical headwinds, though noting that this buildout is very concentrated in a handful of countries, namely the U.S., China, South Korea, etc. They tied the AI investment boom to near-term inflationary pressures as well, cautioning that any future re-assessment of AI profitability could sharply decrease investment and tighten financial conditions. Hence the jitters in the tech sector both in U.S. and South Korean markets seen overnight.
Russia sank another cargo vessel off the coast of Bulgaria overnight, while another was struck in the vicinity but suffered less serious damage. Reuters is reporting 11 sailors missing at the time of writing, with search and rescue efforts still ongoing. This follows similar attacks last week, with Russia sinking two vessels in the far western Black Sea near Romania and Bulgaria, both NATO members. Russia has been continuously probing the edges of NATO territory for some time now, not just in the Black Sea but also in the Baltics and Arctic, effectively seeing what they can get away with and how NATO forces will respond to such incursions. Bulgaria has reportedly summoned Russia’s ambassador, with Prime Minister Rumen Radev noting the attack was “absolutely unacceptable,” urging both European Commission President Ursula von der Leyen and NATO Secretary General Mark Rutte for support. On the latter, Rutte said this morning that NATO will continue to adjust its military presence on its eastern flank as needed, but the obvious elephant in the room is U.S. support for the bloc. The Trump administration has been very publicly critical of NATO, and the announced diesel diplomacy could potentially embolden Russia further if they view U.S. support as waning, which could drive them to test the edges more aggressively. This keeps Black Sea shipping risks front of mind for the market, with Russia targeting Ukraine’s primary alternative routes with their primary Black Sea ports still effectively cut off.
Mother Nature is impacting the flow of commodities via the Danube River as well, with the Sulina Canal being closed today due to adverse weather, with shippers expecting the closure to last a few days. Coupled with the disruptions from Russian attacks, this adds additional pressure on Ukrainian commodity shipment. Ukrainian farmers union UAC today said they expect the country’s wheat exports to total no more than 11 million metric tons in 2026/27 due to the myriad of disruptions; that is 1.5 million metric tons lower than USDA’s most recent estimate of 12.5 million on Friday’s October WASDE. Cumulative Ukrainian wheat exports since July 1 are currently down 44.2% versus the same period last year.
NFIB’s Small Business Optimism Index fell for the second consecutive month in September, coming in at 97.9 versus the 98.7 seen in August, effectively matching analyst estimates but representing the lowest reading since June. NFIB Chief Economist Bill Dunkelberg noted: “small business owners are proceeding with caution as they interpret how rising costs, interest rates, and the difficulty in finding qualified employees are impacting their business.” Interestingly, the top reported problem was labor quality and availability for the third consecutive month, followed by inflation. Self-evaluations of the health of their own businesses saw a substantial decline from August into September, with the share of “good” falling 9% month-on-month to now sit at 48%. The share of small business owners reporting that it is a good time to expand their business also fell notably to now sit at only 7%, down from the 12% seen in August.
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Algeria's large milling wheat tender shows buyers switching origins, with European supply supported and Argentine and Russian Baltic wheat in contention. The shift helps explain why U.S. wheat exports trail their pace and why Russia's northern ports now carry so much weight.
October 14 – Stock futures are pointing to a mixed open after yesterday's decline, with all eyes on the upcoming September CPI release this morning as the market looks for signs of the pass-through of inflationary pressures currently held at the producer level. To that end, we’ll also get updated producer level inflation tomorrow with September PPI on tap. The VIX remains relatively muted to start the day, hanging near 15.3 at the time of writing. The dollar is sitting just above unchanged, near 102.25 after a sharp reversal yesterday after reaching a fresh 18-month high on Monday. Treasury yields are off slightly this morning, with 2-year yields at 4.776%, 10-year yields trading back below the 5.20% mark, and 30-year yields at 5.55%. Crude oil is pushing higher to start the day following notable escalations between the Saudis and Houthis, with nearby WTI up 1.2% to trade just above $95.90 and nearby Brent up 0.6% to trade near $106.30. The Houthis launched widespread attacks across Saudi Arabia over the last 24 hours, striking the Aramco headquarters complex in Dhahran while also targeting multiple sites in the Riyadh area, while the Saudis respond with heavy airstrikes on Houthi targets in Yemen, as well as fuel infrastructure in the capital city of Sanaa. Both sides appear to be signaling further escalation ahead, keeping this flashpoint in focus. Meanwhile, the ags are looking at a mixed start to the day, with soybeans seeing the biggest strength and the wheat complex seeing the biggest weakness.
Argentina's strong wheat harvest and a run of export tax cuts have made its wheat more competitive than wheat from rival exporters, just as Black Sea disruption bottles up Russian supply. The main remaining risk is the harvest itself, where heavier rain linked to El Niño threatens the quality that Brazilian importers rely on.
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