Perspective: Morning Commentary October 14

By: Arlan Suderman, Chief Commodities Economist

Tue, 14 Oct 2025, 13:29

Today's Perspective Video: China's Rare Earth Power Move

October 14 – It’s day #14 of the partial government shutdown, and stock futures came under pressure once again overnight, taking back much of the previous day’s gains on renewed China concerns as new port fees charged by both sides go into effect today. The VIX rallied to a nearly five-month high just below 23 this morning as market anxiety emerged, although it is currently trading below 22, while the dollar firmed to trade near 99.4. Yields on 10-year Treasuries to nearly four-week lows as they tested support at 4%, while yields on 2-year Treasuries traded near 3.50%. Crude oil prices dropped to fresh five-month lows below $58 per barrel on rising economic concerns amid the heightened U.S. – China tensions, while the grain and oilseed markets slipped lower as well.

Both China and the United States implemented high port fees on ships having ties to the other country today, adding to tensions between the two countries. The port fees issue emerged several years ago during the Biden Administration when labor unions raised the issue of the dying shipbuilding industry here in the States. On the one hand, they were concerned about losing high paying jobs here in the States, but they also raised national security concerns. China, with its subsidized cheap labor was virtually undercutting much of the rest of the world in ship building costs, which was effectively cornering the market. An overwhelming majority of the new ships being built were being built in China as a result. Regarding national security, the United States found itself in a position of lacking sufficient service ships for the military to support troop ships should a war break out somewhere in the world. That made it a national security issue.

The plan developed during the Biden Administration was to charge high port fees for ships built in China and/or operated by Chinese companies to provide an incentive for shipping companies to get their ships built elsewhere, including to revive the U.S. shipbuilding industry. The Trump Administration made a few adjustments to the plan, including waiving fees on bulk carriers to avoid penalizing the U.S. grain industry. Shipping companies began to switch their orders for new ships to non-China builders, angering China, which last week announced their own set of port fees targeting U.S. owned and/or operated ships. U.S. port fees are expected to cost COSCO, China’s largest container shipping company, an additional $1.6 billion in fees in 2026, while Clarkson’s estimates that China’s port fees will impact 15% of tankers, 4% of dry bulkers, 7% of containers, 8% of LPG and 17% of LNG shipments with an average increase of port fees totaling $2 million per impacted vessel.

This came on top of the rare earth minerals export ban that I outlined yesterday. China has been slowly tightening its grip on rare earth mineral and magnet exports for some time, and with those restrictions expanding to much of the world in November. Recently released data revealed that rare earth mineral exports fell 31% to just 4,000 metric tons in August – their lowest level since the trade war began – despite a May agreement to allow for their exports. Industry representatives indicate that they are required to send China detailed proprietary descriptions of how the rare earth minerals are used in their production lines, including pictures, in order to receive rare earth mineral shipments, and now even those will likely be shut off. But China’s primary objective appears to be to not just control the global production of high-tech products, but to do as much as it can to shut down the production of high-tech military equipment outside of China. And that’s what makes it a significant national security concern, not just for the United States, but for much of the West.

China imported 12.87 million metric tons of soybeans in September – a record for the month – as it continued to soak up all of the South American supplies that it could. There were no U.S. soybeans in that total. The September imports equate to 473 million bushels, or 56% of all of what it imported from the United States in the previous 12 months. Soybean imports into China from May to September exceeded the previous year’s pace by 8.3 mmt (305 million bushels) or 15% as it built up supplies. It still has less than 10 mmt (367 million bushels) of demand to fill for arrival between November and January, before South American supplies begin to arrive. It could still buy those supplies from the United States, or it could pull from its reserves, which are estimated to be near 43.5 mmt, or near 1.6 billon bushels.

Conflicting reports of whether President Trump and President Xi will meet on the side at the APEC meeting in South Korea late this month have soybean traders concerned again this morning, with those concerns spilling over into the corn and wheat markets overnight as well in what was generally “risk-off” trade across the markets. As such, the commodity markets start the day facing those fear headwinds to start trade today. We should get last week’s export inspections released by FGIS mid-morning to potentially influence trade, depending on the numbers.

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