Perspective: Morning Commentary October 13

By: Arlan Suderman, Chief Commodities Economist

Mon, 13 Oct 2025, 13:41

October 13 – It’s day #13 of the partial government shutdown amid rumors that the Democrats may agree to the continuing resolution to fund the government after a day of anti-Trump protests scheduled across America on Saturday. That gives a glimmer of hope that we might see the government reopen next week, but it also indicates that we’re likely to be shut down for another week. Banks and government offices are closed regardless today for the Columbus Day holiday. The bond market will be closed today due to the bank closures, but the stock market will be open as usual, and most commodities will be open for trade as well.

Stock futures came roaring back overnight after both U.S. and Chinese officials softened their tone from late week threats that sent the markets reeling on Friday, although this morning’s levels remain well below where we were on Thursday of last week. The problems remain, following China’s steps late Thursday to hold the world hostage regarding essential rare earth minerals and magnets, but the rhetoric has eased. The VIX pulled back a bit from its 15-week high above 22 on Friday, but it remains elevated above 20 this morning. The dollar index is trading near 99.2. The Treasury markets are closed for the holiday today. Crude oil prices followed the equities back higher following Friday’s big liquidation, but with even less enthusiasm amid ample supplies. Soybean prices bounced very modestly overnight, while sinking wheat prices were a drag for the corn market.

China played the rare earth minerals trump card on Thursday, which I covered in that morning’s commentary. However, the markets didn’t figure that out until late morning on Friday, when President Trump responded after a number of countries reached out to him regarding China’s actions. Friday turned into a “risk-off day across the spectrum of markets after President Trump threatened massive tariffs – possibly 100% - on Chinese consumer goods coming to the United States in response to what China did on Thursday. The markets reacted on Friday instead of on Thursday because they only respond to those things that impact short-term financial gain or loss, whereas China’s actions on Thursday present an even greater longer-term threat, as I outlined at the time.

The issue goes back several decades when China bought a U.S. company that processed these rare earth minerals and magnets. China had its own facilities that processed these products, doing so much cheaper thanks to cheap labor and government subsidies. Its purchase of the U.S. facility was approved on the condition that it would continue to operate it here in the States for five years. It did so for five years and a day, before moving it to China. Similar actions occurred elsewhere as well, until China controlled 90% of the processing of rare earth minerals and magnets, with much of that migration occurring over the past two decades. Mining and processing of these products is expensive, and environmentally dirty, so many countries were happy to allow China to do so.

China knew what it was doing. It knew that these products would be essential for developing the electric economy of the future – including everything from cell phones to plane engines to advanced military weapons. The latter is the key to reaching its stated goal of having the top military in the world, along with the top economy. I’ve been warning for the past six months that this day would come, but it came sooner than I anticipated that it would. Why now? The move likely came due to steps that the Trump Administration recently took that were reported last week. The Trump Administration invested in at least five mining companies in Greenland and the United States. The Administration is reportedly applying the same warp speed policy it used to fast-track vaccine production during Covid to getting these mining and processing companies up to speed to remove our dependency on China for the rare earth minerals and magnets that we need to defend ourselves, let alone to support our economy via the production of vehicles and other electronic products. China has been building for this day for several decades. As I reported this summer, this was its only true leverage that it had on the United States, and on the rest of the world. It had to play this card now, before the United States took away that leverage by garnering its own supply. This is no longer a China versus Trump battle, but rather a China versus the world issue.

Most people still do not grasp the significance of rare earth minerals to the world’s geopolitical future. Many in the markets and on Main Street will continue to see this as a market response to President Trump’s tariffs. But world leaders now see it differently, even if they’re not going to publicly speak of military vulnerabilities due to how China is holding rare earth minerals hostage from the rest of the world. But that’s also why I’ve been skeptical that we would see a major commodity trade deal with China. As important as that is to agriculture, the rare earth minerals battle is even more important to national security – to both China and to the United States. As such, I didn’t expect it to rise to the top of the negotiating priority list. Hopefully there will be a deal, but it’s not looking good now.

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Matt ZellerWed, 05 Aug 2026, 12:39

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Mike CastleTue, 04 Aug 2026, 14:58

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