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Perspective: Morning Commentary for November 3

Mike Castle
Mike Castle

Market Intelligence - Fertilizer Analyst

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November 3 – It’s election day in the U.S., with the corresponding geopolitical uncertainty looking to drive a day of volatile, headline-driven trade. Stock futures are pointing to a mixed open, with the Nasdaq hoping to find some turnaround Tuesday action to stop the bleeding from the recent selloff that has battered the tech sector and drove the index to its lowest close since late July yesterday. The VIX is off its overnight highs but remains elevated, hovering near 20.8 at the time of writing. The dollar is effectively unchanged to start the day, trading at 101.82. Treasury yields are quietly higher after their recent slide that has coincided with the selloff in the equities, particularly tech, potentially signaling some investors fleeing to safe havens, with 2-year yields at 4.585%, 10-year yields at 4.919%, and 30-year yields at 5.294% this morning. Meanwhile, the ags are mostly lower at the break.

Crude oil prices are falling sharply at the time of writing despite renewed U.S. strikes on Iran overnight, with the market clearly preferring to focus on headlines of potential diplomacy prevailing amid the ongoing push by Qatari mediators and some softening of rhetoric on both sides. For what it’s worth, the strikes carried out by the U.S. on Iran’s Qeshm Island were relatively limited in scale, not the feared major resumption of offensive operations that have been threatened for weeks now. The timing of these threats has largely been tied to the the U.S. midterm elections, which are taking place today. As such, traders remain on edge as they await the next headline or signal of what lies ahead. Elsewhere in the broader conflict, the Iran-backed Houthis have targeted yet another Saudi airport, this time the Abha International Airport in the country’s southwest, while more ships have reportedly hit Iranian mines in the Strait of Hormuz. Even so, the focus remains on diplomacy, with Iranian President Masoud Pezeshkian saying today that a return to war “would benefit no one,” while noting that Iran was still trying to resolve the crisis “through dialogue.”

The U.S. Logistics Managers’ Index rose to 70.7 in October, up slightly from September’s 70.2 and marking the second-highest reading since March 2022, trailing only the 71.1 seen in June. The report points to a very clear restocking phase for the U.S. supply chain ahead of the fourth quarter holiday season, with inventory levels jumping 8 points month-on-month, while inventory costs surged a further 8.9 points to reach their highest level since March 2022. Warehousing prices also saw a notable uptick to now show their fastest rate of growth since May 2022. While transportation prices did see some moderation from September into October, the aggregate logistics cost index including inventory, warehousing, and transportation rose to 257.5, the highest since March 2022. You’ll notice I’m saying 2022 a lot after parsing through this data, and that’s not by accident. We’ve been warning about the ongoing buildup of inflationary pressures for all of 2026, and today’s report only reinforces that concern, showing a combination that could keep supply-driven inflationary pressures elevated into 2027.

U.S. corn and soybean harvest continued to play catch-up on yesterday afternoon’s USDA Crop Progress report, with corn advancing 14% week-on-week to reach 74% complete, 1% ahead of analyst estimates, and soybeans advancing 9% week-on-week to reach 88% complete, matching analyst estimates. Harvest of both crops remains delayed amid the ongoing wet fall for the Midwest, with corn harvest still off to its slowest pace since 2019 and soybeans the slowest since 2021. Most major production areas saw at least some amount of precipitation yesterday, with the heaviest totals centered in the Northern Plains, and plenty more rain is moving through today and in the days ahead, likely knocking combines back out of the field. Forecasts open up notably by the end of this week and into next week, however, which should allow for a nice window to make the final push toward completion, albeit with notable delays. It will be interesting to keep an eye on potential quality issues in the areas with the most serious delays.

Initial U.S. winter wheat ratings came in at only 44% good/excellent, sharply below the average analyst estimate of 50%. Interestingly, the lowest ratings were seen in Oklahoma and Washington, both pegged at 25% good/excellent, which would be 12% and 25% below their previous five-year averages, respectively. That national number is roughly in line with the first published conditions data last year, though it’s worth noting that came notably deeper into November due to the government shutdown. Excluding last year from consideration, the previous five-year average for initial U.S. winter wheat ratings was 40% good/excellent. Meanwhile, U.S. winter wheat planting remains off to its second-slowest start on record, as shown below, advancing 7% week-on-week to reach 83% complete, a full 3% behind the average analyst estimate of 86%. Oklahoma remains the most notably delayed, sitting at only 62% complete, trailing their previous five-year average pace by 17% and continuing to represent the slowest pace in at least the last 15 years. The forecasted window opening up by the end of this week into early next week should allow for farmers to play-catch up, especially with the incentive of four-year highs in crop insurance prices, but final planting date deadlines loom in the middle of this month for some portions of the state and the end of the month for others.

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Perspective: Morning Commentary for November 3

November 3 – It’s election day in the U.S., with the corresponding geopolitical uncertainty looking to drive a day of volatile, headline-driven trade. Stock futures are pointing to a mixed open, with the Nasdaq hoping to find some turnaround Tuesday action to stop the bleeding from the recent selloff that has battered the tech sector and drove the index to its lowest close since late July yesterday. The VIX is off its overnight highs but remains elevated, hovering near 20.8 at the time of writing. The dollar is effectively unchanged to start the day, trading at 101.82. Treasury yields are quietly higher after their recent slide that has coincided with the selloff in the equities, particularly tech, potentially signaling some investors fleeing to safe havens, with 2-year yields at 4.585%, 10-year yields at 4.919%, and 30-year yields at 5.294% this morning. Meanwhile, the ags are mostly lower at the break.

Mike Castle
Mike Castle
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Perspective: Morning Commentary for November 2

November 2 – Stocks are looking to bounce back after Friday’s ugly selloff, with the tech heavy Nasdaq showing the sharpest gains after posting the sharpest losses last week. The VIX touched a nearly seven-month high on Friday but has reversed course sharply since, down another 2% to start the day near the 19 level. The dollar touched a one-month low overnight but has recovered since, currently hovering near 101.61. Treasury yields are notably mixed to kick off the week, with 2-year yields up 2-basis points to sit at 4.60%, while 10-year yields are down over 2-basis points to sit at 4.905%, and 30-year yields are down nearly 4-basis points to trade at 5.272%. The ags are largely mixed at the break, with corn and wheat clinging to small gains while soybeans show small losses. It will be interesting to see if more strength will be seen at the open after a massive 1.730 million metric ton (68.1 million bushel) flash sale of U.S. corn to Mexico was just announced, as well as another 136k metric tons (5.0 million bushels) of soybeans to China. Amid the sharp break lower in prices, these are the kind of signals these markets need to see to stop the bleeding.

Mike Castle
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Perspective: Mid-Day Commentary for October 30

October 30 – Intel is officially seeing its sharpest one-day drop on record, with its stock currently down nearly 29% as the selling pressure in the tech sector intensifies amid renewed fears of the surging costs associated with the ongoing AI buildout. That selling pressure has spread across global chip stocks, with the Philadelphia Semiconductor Index (SOX) down nearly 7% at the time of writing. A good share of this weakness is likely more of a rotation of money out of tech and into other sectors, however, with the tech heavy Nasdaq seeing the biggest weakness as it falls over 3% on the day to reach its lowest level since early August, though the S&P 500 is down a more modest 1.5% to trade at a roughly six-week low, while the Dow Jones is down only 0.7%, back to where it was trading early last week. The VIX is surging in turn, up over 14% on the day to carve out a new high for the week, currently hovering near 19.7 at midday. The dollar has had a volatile session but now sits up 0.1% on the day to trade at 101.95. Treasury yields remain lower at midday, perhaps reflecting some money leaving the equities space and looking for safe havens, with 2-year yields off 4-basis points to trade at 4.614%, 10-year yields off 3-basis points to trade at 4.956%, and 30-year yields just below unchanged to sit at 5.326%. Crude oil is looking to end the week on a strong note as we head into the weekend market closure with fears of Middle East escalation lingering as Tuesday’s midterm elections arrive, with nearby WTI posting another fresh six-week high today, currently sitting up 1.2% to trade near $104.15, while nearby Brent is up 2.5% to trade near $113.60, its highest level of the week.

Mike Castle
Mike Castle
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