Perspective: Mid-Day Commentary for November 6

By: Arlan Suderman, Chief Commodities Economist

Thu, 06 Nov 2025, 17:18

Today's Perspective Video: China Cuts Tariffs on U.S. Commodities

November 6 - It's generally a "risk-off" day in the broader markets, with both the commodities and equities under pressure, while money flows into the relative safety of the Treasury market. The tech sector lead equities lower, while the VIX firmed to trade near 20, and the dollar index traded near 99.8. Yields on 10-year Treasuries are trading near 4.08%, while yields on 2-year Treasuries are trading near 3.55%. Crude oil prices are 1% lower at fresh 2-week lows, while soybeans lead the grain sector lower on heavy fund liquidation as the China trade agreement faces challenges.

The U.S. Supreme Court heard arguments for three hours on Wednesday in the case testing the legality of President Trump's tariffs implemented under the Emergency Economic Powers Act - IEEPA. U.S. Solicitor General D. John Sauer was grilled with questions by both conservative and liberal judges. That could mean that conservative judges have heard the criticism that they're simply going to back President Trump regardless of the points of the case, so that they are covering themselves by asking the hard questions. Or it could mean that President Trump's case is in trouble, as this Court has frequently erred on the side of giving Congress power over administration agencies. There have been 38 "Friends of the Court" amicus filings regarding the two tariff cases currently before the court, and the overwhelming majority have been opposed, with just a half-dozen supportive. A Trump loss here would likely not mean the unwinding of many trade deals at this point, but it would take away a significant leverage tool used by Trump for future negotiations. President Trump will attempt to keep tariffs as a tool using other legal paths, but those too would likely be challenged.

A Chinese firm announces a trade deal. Supply chain operator and property developer Xiamen C&D said that it has contracts totaling more than $5.2 billion to buy commodities from seven agribusinesses and trading houses, including Cargill and Louis Dreyfus in Shanghai, according to Reuters. The named commodities include soybeans, corn, cotton and other products. No details were released regarding the origins of commodity purchases, since these are multi-national firms. Reuters reports that Xiamen C&D also has contracts with Syngenta and CHS. The markets were unimpressed by the story, due to the fact that it lacked specifics regarding U.S. originated products.

This morning's commentary illustrated some of the obstacles to China fulfilling its end of the bargain in last week's quickly negotiated trade deal. The window of need is small in which China could positively impact the current marketing year balance sheet, and U.S. soybean prices are not competitive. They were cheaper prior to the agreement, but the agreement resulted in a $1 plus rally in U.S. prices, and Brazil basis fell more than 30 cents per bushel during that time as well. Suddenly, Brazil soybeans are priced near that of U.S. supplies or cheaper, depending on the origin, and that's if there is NO retaliatory tariff. But the graphic below shows what happens when the remaining 10% retaliatory tariff is added on. Chinese crushers have zero incentive to pay up for higher priced U.S. soybeans, especially when demand for soymeal is quite soft currently. China's state grain buyer could make the purchases to go into its reserve supply, but will it take shipment of 12 million metric tons for its reserves in such short order?

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Matt ZellerMon, 03 Aug 2026, 12:45

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Mike CastleFri, 31 Jul 2026, 16:33

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