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Perspective: Mid-Day Commentary for October 21

Mike Castle
Mike Castle

Market Intelligence - Fertilizer Analyst

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October 21 – Stocks remain in the green at midday, still led by the tech heavy Nasdaq (+1.1%), then the S&P 500 (+0.35%), and Dow Jones (+0.2%). The VIX has cooled in turn, hanging near 16.65 at midday, its lowest level of the week. The dollar is trading just above unchanged, near 101.77 at the time of writing. Treasury yields are quietly mixed at midday, with 2-year yields sitting at 4.79%, 10-year yields at 5.11%, and 30-year yields at 5.418%. Crude oil remains in the red, with nearby WTI down 1.3% on the day to trade near $96.90, though nearby Brent is down only 0.1% to trade near $108.70. The ags are largely mixed, with notable gains seen in the cattle complex, particularly feeders, while the wheat complex is down double digits following reports of progress in U.S.-led negotiations between Russia and Ukraine.

Multiple headlines of progress in today’s talks in St. Petersburg are hitting the wires at midday, with Reuters reporting that Russia has accepted the U.S. proposal to resume trilateral talks with Ukraine next month—if this comes to fruition, it would be the first such meeting held since February, a notable step in the right direction. Kremlin aide Yury Ushakov emphasized Russia’s desired framework for peace negotiations focused on “building a security system for Russia and Ukraine after the end of the conflict,” continuing to highlight the implementation of U.S. / Russian economic cooperation. While this is obviously a notable improvement in diplomacy between the two countries after seeing nothing but increasing escalation for months, I would urge caution before concluding that the conflict is truly coming to an end. In referring to Witkoff’s comments to Putin, Ushakov noted “new points in the approaches of the Europeans and Kyiv, although they did not contain much useful in the context of resolving the Ukrainian crisis.” That final portion is what gives me pause, as we’ve yet to see much in the way of actual Russian concessions in the four-and-a-half-plus years of war. This leaves plenty of details to be worked out, though it is still encouraging to see diplomacy resuming—the big question is whether or not this easing of rhetoric translates to an easing of escalations on the ground.

U.S. crude oil stocks excluding the SPR fell 3.06 million barrels week-on-week, much sharper than the average analyst estimate of 0.82 million, pushing total stocks excluding the SPR down to 412.52 million barrels, back to the lowest level seen since late July. The decline was driven primarily by the supply side, with weekly crude oil production falling another 410k barrels per day to 13.269 million barrels per day, the lowest weekly level since the last week of January due largely to the precautionary shutdowns in the U.S. Gulf amid the arrival of Hurricane Isaias. On the demand side, weekly exports fell sharply week-on-week to a four-week low, while refinery utilization fell 0.1% week-on-week to 93.4%. It’s also worth noting that only 300k barrels were pulled from the SPR. Total U.S. crude oil stocks in the SPR now sit at a 44-year low of 282.68 million barrels, but the rate of weekly withdrawal has slowed notably over the last six weeks.

On the refined products, U.S. gasoline stocks saw a weekly draw of 2.95 million barrels, much sharper than the average estimate of 0.443 million, bringing total U.S. gasoline stocks to 205.31 million barrels. Despite weekly production rebounding by over 500k barrels per day, a halving of imports and uptick in exports drove the draw. Conversely, U.S. distillate stocks saw a 1.68-million-barrel weekly build, reversing course from the expected 1.162-million-barrel draw. Interestingly, the build in distillate stocks was driven largely by a 585k barrel per day drop in implied demand, pushing weekly distillate demand to its lowest level in nearly four months.

USDA reported daily flash soybean sales for the sixth business day in a row this morning, the longest such streak in three years. Today’s total was 299k metric tons (11.0 million bushels) of 2026/27 soybeans, a solid amount, but the real surprise was the addition of a destination other than China. Of today’s total, Spain accounted for 165k metric tons (6.1 mbu) while China accounted for the remaining 134k metric tons (4.9 mbu). That’s the first time seeing a destination other than China or unknown in a daily soybean flash sale since Mexico’s appearance back in July. Total U.S. soybean flash sales since last Wednesday now sit at 3.163 million metric tons (116.2 mbu), the largest for any week since November 2023, with the vast majority of that total destined for China. Even with these massive purchase commitments, however, soybean prices continue to extend their decline amid an ideal start to Brazil’s growing season, improvement in U.S. harvest progress, and the weak start to 2026/27 domestic crush. Outside selling pressure is likely taking its toll as well, potentially a sign of managed money length heading for the exit, particularly with headlines of potential peace coming to fruition between Russia and Ukraine, though I would again exercise caution with believing the words before seeing change in the actions on the ground.  

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