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Perspective: Morning Commentary for October 26

Arlan Suderman
Arlan Suderman

Chief Commodities Economist

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October 26 – Stock futures pointed modestly higher overnight as we head into “Fed Week” on Wall Street, but traders will be monitoring plenty of other potential market-moving headlines as we go through the week. We still have two wars on commodity logistics in major commodity producing areas of the world that have every appearance of escalating in the days and weeks ahead, instability continues in France, increasing demand for U.S. Treasuries, and now we can through Brazil into the mix of places where political uncertainty has significant implications. The VIX remains modestly elevated near 19 this morning as a result, while the dollar index trades near 101.9. Yields on 10-year Treasuries are trading near 4.99% at this hour, while yields on 2-year Treasuries are trading near 4.71%. WTI crude oil is trading notably lower near $102, while Brent trades near $116 per barrel. The grain and oilseed markets were also mostly lower to start the week.

The Federal Open Market Committee will hold two days of meetings on Tuesday and Wednesday of this week, with the conversation in that room expected to be lively amid signs that inflation risks are rising as high energy costs that first showed up at the fuel pump and at the wholesale level are now starting to filter into other areas of the economy. The Fed has a history of not wanting to make changes to policy right before a major election, but I’m not sure that all members of the FOMC care about that right now, particularly with the well-publicized friction between the Fed and President Trump over the past couple of years. As such, I wouldn’t be surprised by anything when the Fed releases its revised policy statement on Wednesday, but my bias is that policymakers will show restraint at this meeting amid expectations that it will hike in December.

Brazil’s stock futures plummeted nearly 15% early today as traders reacted to the shocking runoff election win of President Luiz Inacio Lula da Silva following a day of controversial court actions to extend voting in some locations. Circuit breakers paused trading after the open. The results defied history – no candidate has previously won a runoff election when they came in second in the initial run – but it also defied the pre-election polls. The Brazilian real fell by more than 12% in early trading. The market had anticipated that the conservative pro-business Bolsonaro would ride to victory yesterday, and it corrected sharply when the results were announced, while also responding to fears of political uncertainty amid claims of election engineering. Flavio Bolsonaro says that he will seek annulment of the two-hour voting extension in some regions granted by the court just minutes before the polls were scheduled to close. The court decisions came from a court largely appointed by Lula, while Lula will face a Congress packed with conservative Bolsonaro allies following the election. Ironically, Bolsonaro’s father is in prison following his election loss to Lula four years ago, after which he raised accusations of election engineering. Brazil is the world’s largest producer of soybeans, and the world’s second largest exporter of corn.

China’s bifurcated economy continues to challenge policymakers – both domestically and globally. China continues to leverage its cheap labor into making high-tech cars and other products that flood the world at a price below what other countries can produce them. That continues to strengthen China’s massive trade imbalance, fueling its economic and military growth. Stemming that tide has been a primary objective of President Trump during his two terms in office, but it is increasingly the objective of European policymakers as well. Meanwhile, China’s domestic economy continues to struggle amid a shrinking population / workforce. Youth unemployment sat at 18% in September as weak economic growth and rising automation leave few job openings. As a result, they’re not getting married and therefore not having babies – there’s a strong stigma against having babies outside of wedlock in China. That then also translates into fewer homes being bought, a weak property market and low consumer sentiment. Existing home prices are at nearly a decade low, and China’s workforce continues to shrink. China’s population fell by another record 3.39 million in 2025 as its birthrate continues to slide. Its workforce stood at 823 million in 2025, but it is expected to fall to 663 million by 2050 and just 410 million by 2075, creating some real challenges for sustaining China’s growth objectives without expanding its economic borders.

USDA admitted that it made a “clerical” error in developing its crop estimates in September and October. The errors were in corn ear populations for Kansas and Nebraska. But rather than seeing a major downward revision to the agency’s October estimate, that stays the same. Instead, the revisions came by way of a 0.3 bushel per acre increase to USDA’s September estimate, while moving it closer to StoneX’s customer survey results. A plummeting Brazilian real raised fears of active Brazilian soybean and corn selling, pressuring those markets overnight and doing additional chart damage. That chart damage, if it holds in today’s action, could incentivize end users to hold back purchases to let prices come to them, allowing the path of least resistance to remain lower.

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This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.


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Perspective: Morning Commentary for October 26

October 26 – Stock futures pointed modestly higher overnight as we head into “Fed Week” on Wall Street, but traders will be monitoring plenty of other potential market-moving headlines as we go through the week. We still have two wars on commodity logistics in major commodity producing areas of the world that have every appearance of escalating in the days and weeks ahead, instability continues in France, increasing demand for U.S. Treasuries, and now we can through Brazil into the mix of places where political uncertainty has significant implications. The VIX remains modestly elevated near 19 this morning as a result, while the dollar index trades near 101.9. Yields on 10-year Treasuries are trading near 4.99% at this hour, while yields on 2-year Treasuries are trading near 4.71%. WTI crude oil is trading notably lower near $102, while Brent trades near $116 per barrel. The grain and oilseed markets were also mostly lower to start the week.

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