Grain & Oilseeds with Craig Turner - Premium Producer | Funds Liquidate Corn
Funds Liquidate Corn
Craig Turner
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Perspective: Mid-Day Commentary for October 16
Mike Castle
Market Intelligence - Fertilizer Analyst
October 16 – Stocks are squarely in the red at midday, with the tech heavy Nasdaq now down over 2.1% to trade at a one-month low, while the S&P 500 (-0.8%) and Dow Jones (-0.5%) see more modest losses. The VIX is rising sharply following escalatory headlines coming out of the Middle East, with reports of potential Houthi strikes targeting the Saudi’s East-West oil pipeline again, this time in the Yanbu region, while signals out of the U.S. and Israel point to a potential escalation in the conflict with Iran, pushing Wall Street’s fear index to its highest level since late July near 19.7 at the time of writing. The dollar has pared its sharp morning losses to now hang ~0.1% lower at midday, just above the 101.9 level. Treasury yields are quietly higher at midday, with 2-year yields at 4.757%, 10-year yields at 5.106%, and 30-year yields at 5.44%. Crude oil is also spiking in response to the aforementioned headlines out of the Middle East, with nearby Brent now up 3.2% on the day to trade near $109.30, flirting with taking out the mid-September high that represented highs not seen since May, while nearby WTI is up a more modest 0.9% on the day, trading near $98.40. On the ag side, the grains and oilseeds are widely lower, save for small gains in soybean oil, while the livestock sector is pushing higher to end the week.
The U.S. service sector got an ugly surprise in this morning’s release of the New York Fed’s October Business Leaders Survey, with the headline Business Activity index falling sharply to -20.7 in October from September’s -8.7, marking the weakest print since March. Future expectations declined sharply as well, dipping back into pessimistic territory for the first time in 2026 at -5.1, a notable reversal from the 5.0 seen in the month prior. Digging into what matters from the Fed perspective, the employment picture improved, keeping the permission signal for rate hikes in play, with wage pressures easing slightly. Despite less inflationary pressures from wages, the prices paid subindex remains considerably elevated, rising slightly from September’s 69.0 to reach 70.0 in October. The biggest takeaway from my perspective, however, was the signal of attempted pass-through of these inflationary pressures from the producer level to the consumer level—the exact risk I’ve been pointing to for months now. The prices received subindex rose 2.6 point to 36.3, now representing the highest level seen in four years, indicating firms are increasingly passing these rising costs along to consumers. Following yesterday’s red hot PPI data and widening of the spread between producer and consumer level inflation, this morning’s data confirms the risk of seeing CPI continuing to push higher as producers attempt to recover margin, keeping inflation in focus as we move forward into 2027, reinforcing the hawks.
Conversely, the U.S. manufacturing sector showed unexpected strength, with industrial production rising 0.7% month-on-month, above the average analyst estimate of a 0.4% rise and marking the sharpest monthly gain since April. It’s worth noting that in year-over-year terms, this was a 2.2% rise, the sharpest in exactly four years. Total industrial capacity utilization rose 0.5% month-on-month to reach 76.9%, the highest level seen since December 2023, with broad based increases as the operating rate for utilities rose 2.3% to 73.8%, mining rose 0.1% to 87.5%, and manufacturing rose 0.1% to 75.9%. While the biggest strength driving the headline rise in total industrial production was seen in the uptick in utilities, manufacturing output increased 0.3% month-on-month, the largest since April. This continues to point to underlying strength in the U.S. economy, which again sounds like good news on the surface, but keep in mind that can be interpreted by equities traders as reinforcing the permission signal to the Fed to continue their path of hiking rates to combat the ongoing inflationary pressures.
Putin’s Investment Envoy Kirill Dmitriev announced today that Russia and the U.S. are “discussing joint projects in the field of Russian and U.S. data centers.” I’m not trying to make connections that don’t exist here, as we don’t know what discussions have taken place behind closed doors, but it’s hard to ignore the timing of this announcement following Ukraine’s recent strikes on Russian data centers owned by both Sberbank and Yandex, especially in the context of a notable increase in public U.S. pressure on Ukraine to halt strikes on Russian refineries after last week’s agreement on Russian diesel. That increasing pressure could be interpreted by some traders as an attempt to bring the conflict to an end more quickly by taking a more definitive stance in Russia’s favor, potentially removing some Black Sea risk premium from the wheat market. I would exercise caution in interpreting these developments as necessarily creating a shorter path to ending the war, however, as any increase in Russian export revenues could provide additional financial resources to sustain its war effort. Meanwhile, Ukraine’s defense is increasingly shifting toward its European allies, who appear to be taking steps to expand their support. Ultimately, rather than accelerating a resolution, these developments could end up prolonging the conflict by improving the ability of both sides to sustain their respective war efforts.
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Perspective: Mid-Day Commentary for October 16
October 16 – Stocks are squarely in the red at midday, with the tech heavy Nasdaq now down over 2.1% to trade at a one-month low, while the S&P 500 (-0.8%) and Dow Jones (-0.5%) see more modest losses. The VIX is rising sharply following escalatory headlines coming out of the Middle East, with reports of potential Houthi strikes targeting the Saudi’s East-West oil pipeline again, this time in the Yanbu region, while signals out of the U.S. and Israel point to a potential escalation in the conflict with Iran, pushing Wall Street’s fear index to its highest level since late July near 19.7 at the time of writing. The dollar has pared its sharp morning losses to now hang ~0.1% lower at midday, just above the 101.9 level. Treasury yields are quietly higher at midday, with 2-year yields at 4.757%, 10-year yields at 5.106%, and 30-year yields at 5.44%. Crude oil is also spiking in response to the aforementioned headlines out of the Middle East, with nearby Brent now up 3.2% on the day to trade near $109.30, flirting with taking out the mid-September high that represented highs not seen since May, while nearby WTI is up a more modest 0.9% on the day, trading near $98.40. On the ag side, the grains and oilseeds are widely lower, save for small gains in soybean oil, while the livestock sector is pushing higher to end the week.
Mike Castle
- Grains & Oilseeds
Perspective: Morning Commentary for October 16
October 16 – Stock futures are pointing to a mixed open, keeping theme with the choppy week of trade seen thus far as the broader equity sector pushes mostly higher but with a notable shuffling of money flow out of tech and into other areas. The VIX is off notably to start the day, hovering back around 16 after pushing to a fresh one-month high above 18 yesterday. The dollar is adding to yesterday’s losses, down 0.2% at the time of writing to trade near 101.8 after touching a two-week low overnight. Treasury yields are modestly higher this morning, with 2-year yields near 4.76%, 10-year yields at 5.11%, and 30-year yields just above 5.44%. Crude oil is looking to end a strong week on a weak note, with nearby WTI off 1.6% to hang near $96 after posting a fresh four-week high yesterday, while nearby Brent is near unchanged around $105.9 at the time of writing. The ags are off to a mostly lower start, though it will be interesting to see if this morning’s export data that we’ll touch on below brings any strength on the open.
Mike Castle
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