Perspective: Morning Commentary September 2

By: Arlan Suderman, Chief Commodities Economist

Tue, 02 Sept 2025, 13:31

Today's Perspective Video: Big Crops Get Smaller - Part 2; Drought, Demand, & Biofuels

September 2 – Stock futures came under active selling pressure overnight after trade talks with China appeared to fall short last week, and as traders brace for key jobs data to be released later this week. The VIX surged to a four-week high above 18 this morning, while the dollar index followed Treasury yields higher, trading currently near 98.5. Yields on 10-year Treasuries are trading near 4.30%, while yields on 2-year Treasuries are trading near 3.67% as the yield curve continues to trend steeper. Crude oil prices are 1% higher, after surging above $66 for the first time in nearly four weeks earlier this morning. The grain and oilseed markets are all under pressure this morning.

China’s senior trade negotiator returned home over the weekend following three days of talks with his U.S. counterpart, with no trade deal apparently in hand. Both Chinese and U.S. negotiators released rather vanilla statements that were absent any positive outcomes, stating that the talks were “complicated.” That suggests that the two sides remain far apart on many key issues. The next round of talks isn’t currently expected before late October or early November, which increases the focus on China’s lack of purchases for U.S. soybeans. In fact, there are rumors in China’s cash market that the government may be preparing to release 3 – 5 million metric tons of soybeans from its reserves this fall to help fill the deficit of a lack of soybeans coming from the United States. USDA estimates that China’s surplus soybean supplies amount to nearly twice what it imported from us over the past year.

China hosted the Shanghai Cooperation Organization ahead of its big military parade to take place tomorrow that celebrates its World War II victory over Japan. The regional bloc adopted a 10-year strategy advocating a multilateral trading mechanism under the World Trade Organization framework. WTO continues to grant China Most Favored Nation status, allowing it to charge higher tariff rates, which it sees as under threat by President Trump’s efforts to force it to lower tariff rates. China, Russia and India are core members of both the SCO and of BRICS, which also includes Brazil. The four countries are teaming up to counter President Trump’s efforts to use tariffs to reshape trade that has largely favored those nations until now. China committed to 100 “small and beautiful” livelihood projects in SCO member countries costing 2 billion yuan ($280 million), along with an additional 10 billion yuan in loans to those member countries over the next three years. Chinese President Xi Jinping also announced plans to speed up the establishment of an SCO development bank designed to strengthen trade and security among member states.

The bottom line is that China, Russia, India, and Brazil are teaming up to fight against President Trump’s trade policies, among other things. India’s Prime Minister Modi committed to continuing to import Russian crude oil. This suggests that we are not likely to see trade agreements with either Brazil or India in the near future, and we will not likely see peace in Ukraine any time soon. And, a trade agreement with China looks unlikely in the near term as well. China finally has other countries to stand with it against President Trump’s policies. It really didn’t see any choice but to bear the pain of standing up against President Trump, because he was having success in exposing China’s strategy of dominance to much of the rest of the world. President Xi Jinping and the Chinese Communist Party are committed to their goal of becoming the #1 economy and military in the world. Yielding to Trump’s demands would have set those goals back many years, and the inner circle of China’s leadership doesn’t have that kind of time with many of its leaders being advanced in years. Yes, the fight is driving China deeper into debt, and the only way to prop up China’s economy during this battle is through additional heavy subsidies. But Xi continues to enjoy the support of the Chinese people, where he controls the message. The addition of Russia, Brazil and India to help in his fight against the United States further emboldens Xi. Trading partners are being redefined, and Xi is doubling down in his efforts to displace the dollar as the global currency. Doing so will be difficult, but he sees no other option. This means that U.S. agriculture must continue to focus on developing alternative demand options.

China’s Xi is also counting on outlasting President Trump’s tariff war, by Trump either losing legal challenges filed by Democrats, or by Democrats winning back Congress next year and impeaching Trump. A U.S. Court of Appeals for the Federal Circuit ruled Friday that President Trump exceeded his legal authority in declaring national emergencies to justify the tariffs. But the court also throughout part of the ruling that would strike down the tariffs immediately, giving Trump time to appeal the decision to the U.S. Supreme Court. Friday’s ruling does not cover Trump’s tariffs on foreign steel, aluminum and autos, nor does it include tariffs placed on China in his first term, which President Biden kept in effect as well. The president would still have some legal options for imposing tariffs if the Supreme Court rules against him in this case, but those options are more limited than the one currently in use.

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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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