Perspective: Morning Commentary October 3

By: Arlan Suderman, Chief Commodities Economist

Fri, 03 Oct 2025, 13:35

Today's Perspective Video: Shutdown Chaos: Are the Markets Flying Blind?

October 3 – Stocks continue to slowly creep higher, with many logging fresh record highs on expectations that the Federal Reserve will come through with aggressive rate cuts in the coming months after starting the rate cut cycle in September. Meanwhile, we continue into day #3 of the partial government shutdown with no end yet in sight, meaning that today’s monthly jobs report is delayed. The VIX is trading near 16 this morning, while the dollar index trades near 97.8. Yields on 10-year Treasuries are trading near 4.10% this morning, while yields on 2-year Treasuries are trading near 3.56%. Crude oil prices bounced off yesterday’s four-month lows overnight, but they’re struggling to sustain those gains in light of growing oversupply concerns. The grain and oilseed complex traded mixed overnight, finding support from President Trump’s posts about negotiating soybeans with China, but significant questions still surround the possibility of increasing trade with China.

The Senate is scheduled to vote on two opposing funding plans today to reopen the government, but neither is expected to get the necessary votes to move out of the Senate. The Republicans are standing behind the House’s clean bill to fund the government while the Democrats are insisting on a bill that would restore some of the cuts made in the “One Big Beautiful Bill” passed this summer. The sad part about this is, the best of the bills just fund the government through November 21, when we can go through all of this once again. Frankly, Wall Street doesn’t care until the shutdown has a notable negative impact on the economy, and that hasn’t happened yet. That’s why we continue to see Wall Street post new record highs, focused on expectations of more stimulus from the Fed via interest rate cuts.

The Black Sea war continues to intensify amid few signs that we are any closer to peace in Ukraine. In fact, we may be moving further from peace, slowly escalating risks for commodities moving out of the region. Ukraine continues to increase the effectiveness of its attacks on energy infrastructure deep inside of Russian territory in response to Russia’s attacks on its infrastructure. The Ukrainian attacks on Russian refineries appear to be taking a toll, with high diesel prices amid tight supplies creating challenges for farmers in Russia to get their winter wheat crop planted. Russian crude oil exports are increasing amid the loss of refining capacity, but those exports are approaching terminal capacity, suggesting that additional attacks might necessitate that Russia start to reduce output. Many of these wells are difficult to turn back on once they’ve been turned off. Meanwhile, Russia conducted a massive air attack on some of Ukraine’s main gas production facilities today in the Kharkiv and Poltava regions.

A large fire at the Los Angeles Area Chevron Refinery threatens fuel supplies in southern California. This refinery was responsible for 20% of the motor vehicle fuels and 40% of jet fuel consumption in the southern California region. Early indications are that the fire was focused on the jet fuel producing capability of the plant. Southern California is somewhat isolated from Midwest refineries, so it will likely increase imports from Southeast Asia to fill any deficiencies that are a result of the fire, reducing the basis impact on other national supplies.

U.S. grain and oilseed prices continue to find support from President Trump’s Truth Social post earlier this week promising to “Make soybeans, and other row crops, great again” when he meets with President Xi at the end of the month. The first response appeared to be speculative short covering, with fund managers not wanting to risk holding large short positions on the possibility that we could actually see a deal, but we’ve seen a couple of days of strong growth in open interest, suggesting that new longs are getting into the market. Those may be new speculative longs, but we won’t know for sure until we see next Friday’s CFTC Commitment of Traders report. Or they may be end users building coverage, again just in case Trump is actually able to get a deal.

Regardless, it’s difficult to see President Xi agreeing to massive purchases of U.S. Ag commodities at a time when frankly China doesn’t need them, unless he were to get something big in return. For example, I could see Xi agreeing to massive purchases if Trump were to sell out Taiwan, but I don’t see that happening. Xi might do so if Trump were to remove all tariffs on consumer goods shipped to the United States, but I don’t see that happening either. On the other hand, Xi knows that Trump desperately needs the rare earth minerals and magnets that China has – not just the mid-grade, but the high-grade stuff used in defense weapons and other high-grade electronics. Xi also knows that Trump faces a challenging Supreme Court decision next month on the legality of a large portion of the tariffs, and he faces a difficult mid-term election in which he could lose Congress 13 months from now. Xi has a track record of playing the long game. I hope I’m wrong, but I do not see a block-buster deal that sees massive quantities of soybeans flowing to China any time soon – not when Brazil produces them cheaper.

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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.

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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.

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