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Perspective: Mid-Day Commentary for October 1

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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October 1 – Stocks have fallen through the session to hang in the red at midday while the VIX pushes notably higher to sit above 17.5, now a two-week high. The dollar continues its surge higher as well, hovering at a nearly one-and-a-half-year high near the 101.9 level. Treasury yields are falling most sharply at the front-end of the curve, with 2-year yields back down to 4.815%, while long-term yields have fallen from their morning highs to now trade lower on the day, as 10-year yields sit just above 5.27% and 30-year yields sit just above 5.63% at the time of writing. Crude oil has had a volatile session but remains higher at midday, with nearby WTI up 2.4% to trade near $92.50 and nearby Brent up a sharper 3.7% to trade near $101.65. The ags are mostly lower at midday, led down by the soy complex, with soybeans down double digits at the time of writing.

S&P Global’s final September Manufacturing PMI was revised lower to 55.9 from the 57.0 previously reported. This sounds disappointing on the headline, but I should point out that even the lower figure points to a rise from August’s 53.9 and still represents the best print for the metric since May 2022. Demand remains broadly strong, with government and tech-related industries driving higher sales, while production rises in turn. We also got similar data from ISM this morning, with the headline Manufacturing PMI reading dipping slightly from the 54.6 seen in August down to 54.5 in September, slightly below the average analyst estimate of a climb to 55.0. While this represents a three-month low, it’s worth noting that all nine months of 2026 have been solidly in expansionary territory, a major reverse in course after seeing only two months of expansion from 2023 through 2025. As was the case in the S&P report, ISM showed strength on the demand side, with new orders rising from 53.7 in August up to 55.3 in September. Broadly speaking, the U.S. manufacturing sector continues to show renewed strength in 2026, helping support the resilience in growth.

The more concerning takeaway from this morning’s data is the continuation of price pressures that keep inflation fears front of mind, with ISM’s prices paid subindex blowing past expectations as it rose to 77.9 in September, up sharply from 71.1 in August, well above the average analyst estimate of a more moderate rise to 72.3 and also well above even the highest estimate of 76.5. This is a four-month high for the metric, continuing to hang around levels not seen since 2022, with S&P Global’s figures showing intensifying price pressures as well. Employment growth in the manufacturing sector was also notably strong in September, with ISM’s employment index jumping to 52.7 in September from the 51.2 seen in August and S&P showing similar strength. Tying this all together, the narrative fits what we’ve been discussing. Economic growth remains stronger than expected, the labor market continues to prove more resilient than expected, and inflationary pressures are building beneath the surface. All of this continues to point to expectations for more hawkish monetary policy—another reflection of the “good news is bad news” trade in the equities space.

Weekly soybean export sales rebounded to 38.0 million bushels, coming in above the top-end estimate of 36.7 million, with China once again being the featured destination. Cumulative soybean export sales for the 2026/27 marketing year now sit at 817 million bushels, still nearly double last year’s sales at this time and maintaining the strongest pace of sales in four years. China continues to drive the vast majority of this strength, accounting for close to half of our existing sales, with unknown destinations accounting for another 27.4%. Soybean prices continue to come under pressure despite the continued strength on the demand side as forecasts point to an opening window for U.S. farmers to play catch-up on harvest in the week-plus ahead once the current system makes its way out of the Midwest. Elsewhere on the weather front, Brazil has seen excellent September rains to help build soil moisture profiles to benefit continued planting progress and early crop development in the weeks ahead, with the top producing Center West region seeing its wettest September since 2009. The fears of the impact of the current super El Niño on Brazilian production remain in the background, but we have not yet seen any realized negative impact thus far. Even the Northeast, which is expected to be the most affected region, just had its wettest September since 2022. That doesn’t mean there’s not plenty of weather risk still ahead, but lofty managed money length is likely being whittled back a bit, while Brazilian farmer selling picks up as confidence grows following these beneficial rains.

Corn and wheat export sales were more disappointing, both coming in near the low-end of their expected ranges at 21.1 million bushels and 10.6 million bushels, respectively. Both were in the green this morning but have fallen to trade narrowly in the red at midday, with yesterday’s ugly September 1 corn stocks print adding to negativity. Both crops remain exposed to additional demand shifting to the U.S. in the year ahead amid the disruptions to movement from the Black Sea, but the lack of progress thus far is likely a disappointment to the existing speculative managed money length. Cumulative corn and wheat export sales now lag last year’s pace by 30.9% and 30.8%, respectively, needing to see some progress to maintain the optimism that brought this speculative length in. What will be important to watch in the days/weeks ahead is if this break in prices brings buyers back into the market. On the wheat side, we did see a flurry of purchase tender announcements in the last 24 hours, the results of which will be important to keep an eye on. On the corn side, export inspections are off to their fastest start in 10 years, but the ultimate question the market is waiting to answer is whether or not we see the strength in sales to go along with it.

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