Perspective: Morning Commentary October 21

By: Arlan Suderman, Chief Commodities Economist

Tue, 21 Oct 2025, 13:29

Today's Perspective Video: Soybeans Rally on China Trade Hopes

October 21 – It’s day #21 of the partial government shutdown, and stocks continue to consolidate just below recent record highs. President Trump continues to set high expectations for his meeting with President Xi of China next week – China not so much. Meanwhile, traders are monitoring quarterly earnings reports, which thus far continue to be encouraging. Stock futures traded quietly firmer for the most part overnight, while the VIX traded between 18 & 19, and the dollar traded firmer near 98.9. Yields on 10-year Treasuries are trading near 3.96% this morning, as they spend more time now below the psychological 4% level, while yields on 2-year Treasuries 3.45%. Crude oil prices are 1% higher as they bounce off yesterday’s new five-month lows, while the grain and oilseed sector was mixed to lower, with soybeans being the outlier trying to hang onto modest gains.

President Trump is clearly focused on a strong positive outcome to next week’s meeting with President Xi when they both attend the APEC conference in South Korea. Perhaps he knows that talks are going well between the two sides as they meet in Malaysia this week, or perhaps he’s just talking up the markets ahead of next week’s meeting of the Federal Open Market Committee meeting. President Xi has bigger things on his mind this week. He’s focused on the ongoing meetings of the Fourth Plenum of the Chinese Communist Party, which is drawing up the country’s goals and objectives for the next five years stretching 2026 to 2030. But these five-year meetings are not just strategic planning sessions. This is in essence a political convention of the Chinese Communist Party. It’s a time when strategic moves are made in the makeup of party leadership as the party discusses its future direction. We’ve seen some significant shakeups in leadership at previous events. President Xi’s standing is assumed to be secure, although that is never a given. We’ll hear very little publicly of what goes on behind closed doors, but it will have an impact on China’s approach to major issues going forward, including next week’s meeting with President Trump. Perhaps that’s also a reason that President Trump is speaking so positive of next week’s meeting, understanding that party members are also considering China’s relationship with the United States as they make these decisions.

It's widely expected that China will shift toward a flexible growth target in this week’s meetings. The previous policy has been for per capita gross domestic product to double between 2020 and 2035, which would require an annual GDP growth rate of more than 4.5% per year. That is likely one of the factors driving local leaders to build over-capacity in manufacturing which has created so many problems for China in recent years. For example, its electric vehicle production capacity now is believed to be twice what demand can sustain, leading manufacturers to dump cars on the market at very low prices that are not sustainable, but which also trigger retaliation from other countries trying to protect their own auto market. The same thing can be seen in other manufacturing sectors as well. More flexibility in these policies might allow local leaders to focus more on returning efficiencies, but that would also create some unemployment problems for China. There will surely be new goals to support innovation coming from this week’s meetings, with possible emphasis on development of the high-quality chips that China has been seeking from the United States. But we could also see something emerge out of the meetings regarding Taiwan as well, although I doubt that we’ll see verbiage that directly threatens Taiwan. Rather, we will watch for further indications of policy changes that facilitate a move on Taiwan, which we have seen in previous plenum meetings.

Cattle futures plummeted on Friday following a comment from President Trump that he had a deal that would lower beef prices. We learned on Sunday that his plan included importing more beef from Argentina, in the wake of his $20 billion bailout of the country, as he tries to woo that country back out of the influence of China. Cattle futures fell sharply due to fears that the supply of beef would increase in the United States with higher imports. Much of Argentina’s beef exports currently go to China, so it would likely send China more to Brazil to fill its needs, in addition to other sources. But the longer-term concern is that lower beef prices could discourage U.S. producers from rebuilding their breeding herds, which ultimately leaves us more dependent on imports rather than domestic consumption. Trump put high tariffs on steel and aluminum imports to raise domestic prices sufficiently to stimulate development of the domestic steel and aluminum industries. Yet, in this case, he’s expecting to get the same result by following the opposite strategy.

Grain prices came under pressure overnight, while soybean prices tried to hold onto optimism of a trade deal with China next week. The bottom line is that a trade deal that is worth 10 million metric tons of soybeans helps complete China’s needs, while helping to meet USDA’s current balance sheet projections, even though that amount is less than half of what China imported from us last year. On the other hand, failure to get any deal on soybeans from China next week could pull the rug out from under USDA’s demand estimates, leaving a bloated balance sheet.

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Perspective: Morning Commentary for August 7

August 7 – The U.S. economy unexpectedly lost 23k jobs in July, dramatically below market expectations of an 80k increase and marking the worst Non-Farm Payrolls print since February. Furthermore, May and June were both revised sharply downward, with combined revisions showing 103k fewer jobs than previously reported. Outside of the healthcare sector, which added 22k jobs in July, the losses were very broad-based. Government payrolls saw the largest decline, shedding 53k jobs in July, the largest seen since October 2025, while June was revised down to show a loss of 10k jobs as well. The private sector at least saw growth, adding 30k jobs in July, now matching the month prior after it was revised down from the 49k initially reported, and substantially missing forecasts of 78k jobs being added. This is a sharp reversal in course from the largely better than expected U.S. labor data seen earlier this week.

Mike CastleFri, 07 Aug 2026, 13:26

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Perspective: Mid-Day Commentary for August 6

August 6 – Stocks remain quietly mixed at midday as both the S&P 500 and Dow Jones remain just below their fresh all-time highs put in yesterday. This is allowing the VIX to cool to a four-week low below the 15.4 mark, reflecting the collective sigh of relief in the market amid largely better than expected U.S. economic data today. The dollar remains quietly in the green in its relatively tight range this week, trading at 99.9 at the time of writing. Treasuries remain elevated but have cooled from their recent peaks, with 30-year yields trading at 5.189%, 10-year yields trading at 4.647%, and 2-year yields trading at 4.229% at midday. Crude oil also remains quietly in the green, with nearby WTI up 2.3% on the day trading near $76.80 and nearby Brent up 2.4% on the day trading near $81.40. The ags remain mixed, with the wheat complex now squarely in the red while corn and soybeans cling to small gains, and the livestock complex largely pushes lower.

Mike CastleThu, 06 Aug 2026, 15:18

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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