Perspective: Morning Commentary for May 26

By: Arlan Suderman, Chief Commodities Economist

Tue, 26 May 2026, 13:10

May 26 – Hopes for peace in the Middle East pushed futures for the major stock indices to new record highs overnight, with the VIX trading below 17 on that optimism. The dollar index is trading near 99.1 this morning. Yields on 10-year Treasuries are trading lower near 4.49% in early trade, while yields on 2-year Treasuries are trading near 4.06% in a significant narrowing of the yield curve. WTI crude oil is trading near $93 per barrel at this hour, while Brent trades near $99 per barrel. The grain and oilseed complex largely followed crude oil prices lower.

So close, but yet so far. Wall Street deeply hopes that we’ll soon have a peace deal with Iran, as investors chose to take the president at his word over the weekend when he said that a deal is close. There were even comments that we’re 95% there, but a look at the remaining 5% provides the wake-up call that we may be a long way from a solid peace deal with Iran. That 5% includes Iran’s willingness to give up the enriched uranium that is possesses, as well as the reopening of the Strait of Hormuz free of any charges or control by Iran. Comments made by Iran over the weekend suggest that the Revolutionary Guard is no where close to inking such a deal. In fact, news reports over the weekend suggest that the deal being worked on is largely another 60-day ceasefire in which to continue to negotiate on these points for which there has been little to no movement.

President Trump continues to say that he’s in no hurry to reach a deal, but the Revolutionary Guard is treating these negotiations as if they believe that Trump is anxious for a deal ahead of the midterm elections, and the RG is pushing the limit to see how far it can go to get concessions. As I’ve been stating, the Revolutionary Guard believes that time is on its side. In fact, that’s its only hope for survival – to stretch things out as long as possible, hoping that domestic and international political pressure push Trump toward backing down on his demands. The food and energy-based commodities are trading the possibility of a peace deal that would quickly restore supplies. I remain skeptical that we will see such a deal that has the ability to deliver on that promise, and I also believe that inventories will get worse before they get better, even if there is a deal today.

China built its economy and its military on cheap labor that enabled it to build a strong trade imbalance funneling money its way, along with strong foreign direct investment (FDI) in that economy that produced inexpensive goods and services that the world wanted. President Trump’s tariff policy did not unravel China’s trade imbalance, but it affected it enough to disrupt the money flow into China. FDI hit an 11-month low of $5.6 billion in April, down nearly 57% on the month and down 26% on the year, while showing a trend toward slowing momentum. This goes contrary to a number of Chinese initiatives over the past year designed to attract foreign investment, which is why I stated going into the Beijing summit that Xi needs Trump about as much as Trump needs Xi right now – at least over the next 6 to 12 months. The decline in FDI in China is in its fourth year, but the drop is not seen in all areas. FDI continues to flow into China’s high-tech industries – in fact it’s gaining momentum. FDI for the first four months of the year into the tech industry is up 20% on the year to $17.1 billion, accounting for 40% of all FDI.

Persistent rains in China that slowed harvest resulted in more than 20 million metric tons of sprouted wheat that could only be used for livestock feed in 2023. That significantly reduced corn demand for feed in 2023 as lower quality wheat priced itself into the feed market. A similar pattern is seen unfolding this year, but observers thus far do not expect it to be as bad as that seen in 2023. Most of the North China Plain is currently too wet, causing mature wheat fields to show discoloration reflecting developing quality problems. The current thinking is that this year’s damage may cause sprouting in “just” 8 to 10 mmt of wheat (6 – 7% of total production), but this will need to be monitored in the days ahead. The good news is that our forecasters at Commodity Weather Group expect a drier trend over the next one to two weeks to reduce the threat.

This takes place within the context of the recently reached trading agreement that basically has China importing $17 billion in Ag products on top of the previously agreed to soybean purchases, which should be 25 mmt for the upcoming season. China’s weather issues could impact the potential corn / wheat mix of possible purchases that it makes. This is the time of year when Chinese crushers tend to start making purchases of soybeans for delivery in the new marketing year, and this year is no exception. South American supplies continue to be the cheaper option, and by a considerable margin – and that’s before retaliatory tariffs are applied. Crushers have already purchased roughly 1.5 mmt of Brazilian soybeans for September / October delivery, with another 3 mmt of new-crop Brazilian soybeans in early 2027. This means that state buyers are going to need to start buying soon if they’re going to meet their obligation of 25 mmt for the next year, but I remain skeptical they meet that obligation.

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Perspective: Morning Commentary for August 6

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Mike CastleThu, 06 Aug 2026, 13:24

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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