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Perspective: Morning Commentary for August 24

Mike Castle
Mike Castle

Market Intelligence - Fertilizer Analyst

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Guest Commentary by Mike Castle

Senior Commodities Economist

August 24 – Stocks futures are pointing to a lower open to start the week amid a resumption of trade tensions and concerns regarding the potential downstream impact which we’ll dive into in more depth below. The VIX is elevated in response but still remains on the lower end of what we’ve seen in 2026, hovering around the 15.9 level at the time of writing. The dollar is quietly higher to start the week, appearing to find its footing after last week’s sharp break lower as it trades near 98.93. Treasuries are mixed to start the day, with 2-year yields rising to hover near 4.245% while long-term yields are off slightly, with 10-year yields trading at 4.714% and 30-year yields trading just below 5.24%. Crude oil is quietly lower this morning, with nearby WTI down roughly 1.2% on the day to trade near $85.60 and nearby Brent down 3.2% to trade near $91.40. The ags are mixed but mostly higher, led by corn after Friday’s shockingly low Pro Farmer Crop Tour yield estimate which we’ll also dive into in more depth below.

U.S. Treasury Secretary Scott Bessent published an op-ed in the Financial Times yesterday titled “An economic D-Day is coming for Iran.” As could be inferred from the title, Bessent’s article struck a notably aggressive tone toward not just Iran, but also the countries still doing business with it, summarized well by his statement that “the world should understand that our objective is to sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone.” The administration has been very clear in their intentions to ramp-up economic pressure on the Iranian regime, but Bessent’s article may suggest the next step could include focusing on shifting more of that pressure to third-party nations, potentially via secondary sanctions or other targeted measures. The article did not mention China explicitly, but as the top destination for Iranian exports by a wide margin, they clearly have the most at stake here. Relations between the U.S. and China have moderated notably in recent months, with China’s resumed purchases of U.S. soybeans and Xi’s planned visit to the U.S. next month both prime examples, but it will be very interesting to see if these new measures directly target China—and, if so, how Beijing responds. Bessent is expected to hold a press conference outlining the new measures this afternoon at 1:00 PM Central time, which traders will surely be watching very closely, especially given the timing with markets open.  

Trade ties between the U.S. and Canada have soured yet again, with talks breaking down after Friday’s close despite the two sides appearing close to an agreement late last week. This means the threatened 50% tariffs on a swath of imports from Canada are now technically in effect, impacting an estimated $20B of annual trade, or roughly 5% of the total value of imports from Canada. Canada is threatening dollar-for-dollar retaliation starting September 8th, though that does at least give the two sides another 15 days to come to an agreement before further escalation. From a commodities perspective, it’s important to note that both energy and potash are exempt, but agriculture as a sector does not have blanket exemptions, with areas like dairy and honey in focus. Now the focus will shift to how Canada chooses to retaliate if an agreement can not be reached in the next two weeks.

Corn futures surged higher out of the gate last night following a significantly lower than expected U.S. corn yield estimate released after Friday’s close to conclude last week’s closely watched Pro Farmer Crop Tour. The tour’s national corn yield estimate came in at 173.2 bushels per acre, sharply below USDA’s most recent 180.7 bushel per acre estimate as well as most other private estimates seen to this point. The tour highlighted some significant problems with this year’s corn crop, notably in the areas hit with some of the most extreme heat during the heart of pollination, as well as those affected by extreme weather this month, be it the excess wetness in portions of the Eastern Corn Belt or dryness in the northwestern Midwest. However, as with anything related to commodity fundamentals, it’s important to keep these numbers in context. As can be seen in the graphic below, this estimate is almost always below USDA’s August estimate, with nine occurrences in the last ten years, by an average of 4.44 bushels per acre. That’s not to say we can’t see USDA’s own estimate continue to move lower from here, as the tendency is to see their corn yield drop from the August report into their final January number, but it’s difficult to see them make a cut this aggressive. The factor underpinning this entire dynamic, however, is the ongoing strength on the demand side of the balance sheet. The cuts to U.S. corn ending stocks on the August WASDE were entirely driven by increased demand, highlighting the lack of wiggle room if we do see a notable drop in supply.

The soybean side was an opposite story, pegged at 53.3 bushels per acre nationally, above USDA’s current estimate by 0.6 bushels per acre. This is also rather typical for this tour, however, as can be seen in the graphic below. As could be expected, soybean futures saw weakness out of the gate last night in response, but once again, the bigger factor here will ultimately come from the demand side of the balance sheet. It will be particularly interesting to see how the soybean market handles this afternoon’s announcement from Scott Bessent, especially if it could be portrayed as potentially reigniting trade tensions between the U.S. and China, as their resumed purchasing of U.S. soybeans has been entirely driven by politics, not economics.  

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