Perspective: Mid-Day Commentary for December 2

By: Arlan Suderman, Chief Commodities Economist

Tue, 02 Dec 2025, 17:59

December 2 - Stocks are quietly higher at midday, as investors continue to focus on hopes and expectations for another rate cut from the Federal Reserve next week, even though the debate within the committee is likely to be as heated as it has been for some time. The VIX is trading just below 17 at this hour, while the dollar index is trading near 99.5. Yields on 10-year Treasuries are trading near 4.09%, while yields on 2-year Treasuries are trading near 3.52%. Crude oil prices are modestly weaker, slipping below $59 per barrel, while the grain and oilseed markets are mostly higher.

Wheat prices led the gains in the Ag commodities today, following inflammatory comments made by Russian President Putin. I noted in my morning commentary that a fourth Russia-connected tanker was attacked by drones today - the fourth in less than a week. This one carried soybean oil, although the attackers likely thought it held crude oil. Nonetheless, the attacks poked the bear, so to speak. Putin threatened to cut off Ukraine's access to the sea in response to the attacks on the tankers, which Ukraine may have believed were a part of the "shadow fleet" transporting oil in violation of the sanctions against Russia. Putin stated on television in Russia that, "The most radical solution is to cut Ukraine off from the sea, then piracy will be impossible in principle." Putin also reportedly stated that Russia will retaliate by increasing strikes on Ukraine vessels and shipping facilities, while taking measures against tankers of countries that help Ukraine. That could lead to Ukrainian counter strikes.

Commodity prices soared when Russia first invaded Ukraine nearly four years ago on fears that commodity shipments out of this major export region would be curtailed. The risk is that we may be seeing that threat emerge once again. The Turkish Strait is considered the fifth most significant trading route for crude oil in the world, considering the amount of crude oil that uses the strait to pass out of the Black Sea region. Combined wheat exports from Russia and Ukraine this year are expected to total 59 million metric tons or 2.17 billion bushels, accounting for more than 27% of world exports, with the bulk of those shipments passing through the Black Sea. There's obviously the risk of ships being directly hit, but also the question of when does the cost of insurance on the shipments become too costly for shipping companies to work in the region? An U.S. envoy is in Moscow today seeking to negotiate a peace agreement between Russia and Ukraine, although that may be difficult to achieve.

The national average cash corn price paid on Monday was $4.02 per bushel, which was down from $4.06 per bushel a year earlier. The national average cash corn basis on Monday was -$0.43 per bushel, versus the March contract, down from -$0.27 per bushel the previous year. There's been a lot of hype about this year's low prices, but the graphic below shows that the national average cash corn price has tracked relatively close to the previous year's prices through the first quarter of the marketing year that began on September 1. The futures market has actually performed a bit better, but weaker cash basis resulted in cash prices relatively near to year ago levels over the past several months. Of course, both years are well below the five-year average for the period, reflecting the higher prices of previous years relative to the past year plus. Note how the previous year's cash prices continued to trend higher into February, before the rally broke, with a brief short covering rally that supported prices in April, before trending lower into the summer. It's yet to be seen whether this pattern of following the previous year's path for cash prices continues into the new calendar year, but it does provide some perspective.

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Mike CastleThu, 06 Aug 2026, 13:24

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