Perspective: Morning Commentary October 30

By: Arlan Suderman, Chief Commodities Economist

Thu, 30 Oct 2025, 13:28

October 30 – It’s day #30 of the partial government shutdown, but today’s focus in the financial markets is primarily on yesterday’s Federal Reserve rate cut, as well as on the China trade deal. The VIX is again trading near 17 this morning, even though stock futures were lower overnight. The dollar index is trading near 99.7 after rising to a fresh two-week high. Yields on 10-year Treasuries are trading at a nearly three-week high near 4.11%, while yields on 2-year Treasuries are trading near 3.63%. Crude oil prices are hovering around $60 per barrel this morning, while the grain and oilseed markets react to the trade agreement with China.

Both China and the United States agreed to roll back their port fee structure implemented this month for a year. The United States remains committed to rebuilding its shipbuilding industry, having signed agreements with both Japan and South Korea in the past week to assist in that effort. But China and the United States have called for a one-year truce in the fee structure that is currently disrupting global trading activity. China agreed to tighten restrictions on the export of chemical components that are precursors to the production of fentanyl and the United States agreed to cut its fentanyl tariff in half to 10%. That brings down the effective tariff rate currently being charged against Chinese products entering the United States to 47%. China also agreed to suspend its restrictions on rare earth mineral and magnet exports for one year, while President Trump agreed to suspend his threat to add an additional 100% tariff on Chinese goods starting November 1. The two sides agreed to resolve issues around the app TikTok, as well as to expand agricultural trade. There was little to no mention of contentious issues surrounding Taiwan or conflicts regarding computer chips. Minutes prior to the start of the Trump – Xi meeting, President Trump ordered the U.S. military to resume nuclear weapons tests for the first time in 33 years, in response to the growing arsenals in China and in Russia. The final agreement emerging from the Trump – Xi meeting was just finished overnight the previous night, so it is expected to be signed next week. Trump is scheduled to visit Beijing in Apil.

The agricultural portion of the agreement focused on increased Chinese purchases of U.S. soybeans, grain sorghum and other grains. U.S. Treasury Secretary Bessent – himself a farmer – specifically mentioned soybeans in his comments, stating that China agreed to purchase 12 million metric tons (441 million bushels) in the current season through January, and then another 25 mmt in each of the next three years. This compares to imports of 22.9 mmt of U.S. beans in the past marketing year. My expectation is that China will immediately step up purchases to fill the gap ahead of Brazil new crop soybeans arriving in late February, fulfilling the 12 mmt commitment. The next 25 mmt commitment would likely be for delivery next fall. My first response is one of skepticism, since China only purchased 58% of what it committed to importing in the Phase One agreement during Trump 1.0. This also represents a significantly lower number than what China imported a decade ago. But it’s no secret that China wants to shift its dependency for food-based commodities away from the United States toward South America.

The United States is shifting its primary demand focus toward domestic biofuel production, but the infrastructure is not yet fully built. This helps close that gap until we can make the transition. In fact, its enough demand to support several million acres shifting from corn to soybeans in the coming growing season IF China lives up to the agreement. That said, this is bad news for Brazil soybean producers the next several years IF China lives up to the agreement. My sense is that Brazil does NOT lose 25 mmt of business, as China will use a portion of its U.S. purchases to significantly build its reserves for when it shuts off the United States in a few years. Brazilian soybeans are not allowed into China’s reserves, so this is China’s opportunity to build the reserves once and for all. USDA Secretary Rollins indicated that grain sorghum is also mentioned in the agreement – a victory for Plains farmers – but no details were provided. The Administration also indicated that other agreements signed this week with a half dozen other countries included the purchases of 19 mmt of U.S. soybeans, but details were lacking there as well.

The opportunity is present for China to significantly increase imports of U.S. corn and grain sorghum over the coming year, but we also know that it has been increasingly building relationships with South American suppliers to acquire those two grains. The total potential supply gap for feed grains in China could be as high as 30 mmt if China would choose to fill a portion of it with U.S. supplies. Keep in mind that there are still a number of contentious issues between China and the United States to blow this up at any point. That said, President Xi came out of last week’s Fourth Plenum meeting eager to reach an agreement with the United States to calm the international waters so that he can focus on some of China’s many domestic issues. This may be Xi’s way of “outlasting” Trump – to get along until Trump is no longer in office when he can deal with a president who he feels will be easier to move in his direction. For now, I am cautiously optimistic that this will prove to be beneficial to U.S. Ag in the near-term.

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Matt ZellerTue, 04 Aug 2026, 12:43

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Matt ZellerMon, 03 Aug 2026, 12:45

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Mike CastleFri, 31 Jul 2026, 16:33

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