By: Mike Castle, Market Intelligence - Fertilizer Analyst
September 23 – The Nasdaq hit another fresh all-time high yesterday, with the S&P 500 close to doing so as well, though stock futures are pointing to a quietly lower start to today’s session after surging higher to start the week as optimism surrounding this week’s various diplomatic pushes abounds. That optimism continues to be reflected in the VIX, continuing to hang around roughly three-week lows, trading at 14.3 this morning. The dollar is surging higher, adding to the week’s gains, as it nears the 101 mark for the first time in nearly two months. Treasury yields are off to a higher start, with 2-year yields back up to 4.80%, 10-year yields at 4.99%, and 30-year yields just above 5.32%. Crude oil prices are looking to hold their ground after a steady decline since late last week, with nearby WTI up 1.3% to trade near $91 and nearby Brent up 1.4% to trade near $100.65 at the time of writing. The ags are mostly lower to start the day, likely influenced in part by managed money selling off some existing length amid hopes for improvement regarding commodity flow through the Black Sea as part of this week’s diplomacy blitz.
Diplomatic momentum between the U.S. and Iran will remain in focus today following roughly three hours of talks in New York yesterday between U.S. envoys Steve Witkoff and Jared Kushner and Iranian Foreign Minister Abbas Araghchi. Trump characterized the discussions as “very good” and said another meeting could occur soon, although Iranian officials have stressed that the engagement was indirect and conducted through regional mediators rather than a formal face-to-face negotiation. No breakthrough was announced, with Tehran continuing to press for relief from U.S. economic and military pressure while signaling that progress could allow for the reopening of the Strait of Hormuz, but this is still a meaningful step in the right direction. Attention now turns to Iranian President Masoud Pezeshkian’s UN address this morning, where markets will be watching closely for any indication that Tehran is prepared to build on yesterday’s talks, particularly language surrounding direct negotiations, sanctions relief, and the conditions required for normalizing traffic through Hormuz. However, as I emphasized yesterday, it’s important to maintain caution regarding the progress made this week, as the civilian delegation will still need to sell this at home to the more hardline IRGC-aligned leaders.
Chinese President Xi Jinping is officially on his way to the U.S. as we speak, expected to arrive in D.C. this evening with Trump expected to greet the delegation on the tarmac amid planned fanfare. While tonight will set the stage for optics, the real focus for the market will be on tomorrow’s meetings, the centerpiece of this week’s diplomacy. The two sides have been very publicly cordial this week, continuing to signal an easing of tensions between the world’s two largest economies, with markets reacting accordingly. The tech sector has been breathing a proverbial sigh of relief this week as the U.S. and China emphasize the need for cooperation regarding AI safeguards, taking one possible stumbling block out of the picture, while a commitment to relieve restrictions on the flow of rare-earth minerals could provide another shot in the arm to the sector. With that said, the biggest obstacle now is most likely Taiwan, specifically as it relates to U.S. arms sales. My expectation is that the existing $14B arms package that is effectively sitting in limbo will come into focus per China’s request. There is a way for both sides to spin this as a win, however. The package reportedly includes large quantities of air defense interceptors—a legitimate constraint for the U.S. amid the ongoing conflict in the Middle East. That could create a scenario in which China can portray its continued pause as successfully restraining arms support for Taiwan, while the U.S. can maintain their public commitment for Taiwan’s defense but delay subsequent deliveries or approvals under the pretense of near-term supply limitations, a legitimate argument.
For the ag markets, the biggest question is what we hear, or perhaps just as importantly don’t hear, about the alleged $17B in non-soy ag purchases. Obviously, China has returned to the table for U.S. soybeans in a big way following May’s Trump/Xi meeting, which has provided significant support for the soybean market. What we have not seen, however, is any material progress or acknowledgement from China regarding the additional non-soy purchases, meaning any fresh movement on that side could be seen as a fresh dose of fodder for the bulls. Given the lofty managed money length in the grain and oilseeds coming in, traders will likely be looking for any headlines seen as evidence of such purchases coming to fruition, but a lack thereof could be seen as a disappointment.
Average 30-year mortgage rates surged to 7.12% in the week ending September 18, now the highest level seen since early May of 2024. This was a 15-basis point jump from the week prior, the largest weekly rise seen since April 2025. In turn, overall mortgage application volume fell 1.5% week-on-week, with a 2.6% drop in refinancing applications and a 0.8% drop in new purchase applications. The weakness on both sides pushed the Mortgage Bankers Association’s Mortgage Market Index to 227.3, its lowest level since the end of May 2025. With costs rising and geopolitical uncertainty still lingering over prospective buyers’ heads, the ongoing surge in mortgage rates since the end of February looks likely to limit demand moving forward. The U.S. housing market has held up better than expected in many regards, with fresh updates due out tomorrow morning in the form of August new home sales and building permit applications data, but the bigger question in the market is how this demand holds up this fall and into winter if no relief is seen.
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Dry soil is slowing winter wheat planting in Russia and Ukraine, with a third of Ukraine's area in moisture deficit. Lost export revenue and costly diesel add a second risk to the size of the next Black Sea wheat crop.
September 23 – The Nasdaq hit another fresh all-time high yesterday, with the S&P 500 close to doing so as well, though stock futures are pointing to a quietly lower start to today’s session after surging higher to start the week as optimism surrounding this week’s various diplomatic pushes abounds. That optimism continues to be reflected in the VIX, continuing to hang around roughly three-week lows, trading at 14.3 this morning. The dollar is surging higher, adding to the week’s gains, as it nears the 101 mark for the first time in nearly two months. Treasury yields are off to a higher start, with 2-year yields back up to 4.80%, 10-year yields at 4.99%, and 30-year yields just above 5.32%. Crude oil prices are looking to hold their ground after a steady decline since late last week, with nearby WTI up 1.3% to trade near $91 and nearby Brent up 1.4% to trade near $100.65 at the time of writing. The ags are mostly lower to start the day, likely influenced in part by managed money selling off some existing length amid hopes for improvement regarding commodity flow through the Black Sea as part of this week’s diplomacy blitz.
September 22 – The Nasdaq and S&P 500 both closed within 1% of their all-time highs yesterday, with stock futures pointing to a quietly higher open at the time of writing. Diplomacy continues to be the theme of the week, with markets pricing in optimism, particularly in the tech sector following encouraging results from the weekend’s meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. It’s also worth noting that Bessent yesterday announced the two sides would be meeting again to discuss AI safety and communication protocols in Shenzen, China in about two months, another potential sign of cooperation instead of escalation. The VIX continues to reflect optimism regarding this week’s various diplomatic pushes as it hovers near its lowest level since early September, starting the day trading just below the 14.7 mark. The dollar is sitting just above unchanged, near 100.46 at the time of writing, touching a fresh two-month high earlier this morning. Treasury yields are quietly lower to start the day, also helping bring some calm to Wall Street, with 2-year yields at 4.747%, 10-year yields at 4.949%, and 30-year yields at 5.279%. Crude oil prices continue their push lower, with nearby WTI down another 1.8% to trade near $90.30 and nearby Brent down 1.6% to trade near $98.70, both roughly two-week lows. The ags are looking at a turnaround Tuesday to kick off the session with most of the complex in the red at the break, led down by the wheat complex. Improving forecasts for planting conditions for the U.S. winter wheat crop are likely having some influence, but I’d also point out the signs of potential increasing U.S. pressure on Ukraine, which we’ll dive into in more depth below, possibly spooking out some managed money length.
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