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Perspective: Mid-Day Commentary for August 6

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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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.

Unit labor costs in the U.S. rose by much less than expected in Q2, increasing 1.3% quarter-on-quarter, sharply below the average analyst estimate of a 2.1% rise. Q1 also saw a notable revision in the same direction, falling from the previously reported 1.8% quarter-on-quarter increase to match the preliminary Q2 rise of 1.3%. The softer-than-expected Q2 print was largely a function of better-than-expected unit labor productivity growth, rising 1.4% quarter-on-quarter and blowing past expectations of a decline to 0.6%. Coupled with this morning’s labor data, this is yet another market-friendly print, suggesting better growth and potentially lower than expected underlying inflationary pressures from wages. While the doves should be happy to see this, it’s important to note this is a preliminary Q2 figure of a series prone to revisions. The trade should also bear in mind that while this is a positive for corporate margins, it also signals a continued softening for household incomes, which could translate to softening consumption down the road. Still, the markets will take any dovish surprises they can get at this point, especially amid the notable rise in rate expectations through 2026.  

Exporters reported total new crop soybean sales of 33.2 million bushels in the week ending July 30th, coming in toward the low-end of the expected range but effectively right in line with the previous five-year average for the week. Old crop (2025/26) soybean sales fell to a net 1.2 million bushels, a fresh marketing year low but no real surprise given the time of year. Cumulative old crop soybean sales already sit at 1.533 billion bushels, 13 million above USDA’s current export target, while cumulative new crop soybean sales of 307.65 million bushels are their strongest at this time in four years, reflecting the renewed strength of Chinese buying. Old crop corn sales also fell to a fresh marketing year low at only 4.6 million bushels, but the cumulative total of 3.429 billion bushels is also comfortably ahead of USDA’s current 3.325-billion-bushel export target. New crop corn sales were impressive again at 40.4 million bushels, bringing cumulative 2026/27 corn sales to 379.92 million bushels, below last year at this time but in line with the previous five-year average. All wheat sales for 2026/27 rebounded to a four-week high of 10.9 million bushels, with the Philippines being the featured destination. Cumulative wheat sales remain off to a slow start, now sitting at 265.18 million bushels, representing a nearly 30% decline versus last year at this time and the weakest pace since 2023, but it’s important to keep in mind this is largely a reflection of this year’s small crop, with USDA estimating production down 23% year-on-year. The real concern in the wheat market isn’t necessarily what’s happening with U.S. wheat export demand today, but rather the potential impact of the ongoing issues in the Black Sea region shifting more demand to the U.S. down the road.

USDA reported flash new crop soybean sales to China of another 122k metric tons (4.48 million bushels) this morning, adding to the 132k metric tons seen on Tuesday and 488k seen on Monday. This brings the total for this week’s reported new crop soybean flash sales to 878.15k metric tons (32.27 million bushels), with 742k metric tons (27.26 million bushels) explicitly to China, and the remainder to unknown destinations, which may also be China. This should be supportive for next week’s export sales report, despite today’s numbers coming in near the low-end of expectations. Outside of soybeans, we also saw a 120k metric ton (4.72 million bushel) flash corn sale to Mexico yesterday, with the most interesting note being that 75% of this total was for the 2027/28 marketing year, highlighting the underlying strength of U.S. corn export demand to our top destination.

Expectations for the size of the E.U. corn crop continue to decline amid the ongoing heat stress and drought, with Expana today cutting their 2026/27 E.U. corn production estimate to 49.1 MMT, a 4.6 MMT cut compared to their previous estimate. This follows a similar move from Argus yesterday, who cut their estimate to 48.0 MMT, with the French crop specifically falling to 6.9 MMT, a 50-year low. Much of the focus to this point in the growing season has centered on France, the E.U.’s traditional top corn producer, but southeastern Europe has also dried out notably over the last month, with forecasts calling for more chances of record heat in the region over the next 10 days. USDA cut their E.U. corn production estimate to 53.78 million metric tons on the July WASDE, but we would expect to see them continuing to move that estimate lower on next week’s report, and potentially more in the months ahead depending on how aggressive they get on the August WASDE. This should also translate to an uptick in expected E.U. corn import demand, which should keep additional support under U.S. corn exports in the year ahead, especially if Black Sea risks remain.  

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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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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.

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