Perspective: Morning Commentary September 2

By: Arlan Suderman, Chief Commodities Economist

Tue, 02 Sep 2025, 13:31

Today's Perspective Video: Big Crops Get Smaller - Part 2; Drought, Demand, & Biofuels

September 2 – Stock futures came under active selling pressure overnight after trade talks with China appeared to fall short last week, and as traders brace for key jobs data to be released later this week. The VIX surged to a four-week high above 18 this morning, while the dollar index followed Treasury yields higher, trading currently near 98.5. Yields on 10-year Treasuries are trading near 4.30%, while yields on 2-year Treasuries are trading near 3.67% as the yield curve continues to trend steeper. Crude oil prices are 1% higher, after surging above $66 for the first time in nearly four weeks earlier this morning. The grain and oilseed markets are all under pressure this morning.

China’s senior trade negotiator returned home over the weekend following three days of talks with his U.S. counterpart, with no trade deal apparently in hand. Both Chinese and U.S. negotiators released rather vanilla statements that were absent any positive outcomes, stating that the talks were “complicated.” That suggests that the two sides remain far apart on many key issues. The next round of talks isn’t currently expected before late October or early November, which increases the focus on China’s lack of purchases for U.S. soybeans. In fact, there are rumors in China’s cash market that the government may be preparing to release 3 – 5 million metric tons of soybeans from its reserves this fall to help fill the deficit of a lack of soybeans coming from the United States. USDA estimates that China’s surplus soybean supplies amount to nearly twice what it imported from us over the past year.

China hosted the Shanghai Cooperation Organization ahead of its big military parade to take place tomorrow that celebrates its World War II victory over Japan. The regional bloc adopted a 10-year strategy advocating a multilateral trading mechanism under the World Trade Organization framework. WTO continues to grant China Most Favored Nation status, allowing it to charge higher tariff rates, which it sees as under threat by President Trump’s efforts to force it to lower tariff rates. China, Russia and India are core members of both the SCO and of BRICS, which also includes Brazil. The four countries are teaming up to counter President Trump’s efforts to use tariffs to reshape trade that has largely favored those nations until now. China committed to 100 “small and beautiful” livelihood projects in SCO member countries costing 2 billion yuan ($280 million), along with an additional 10 billion yuan in loans to those member countries over the next three years. Chinese President Xi Jinping also announced plans to speed up the establishment of an SCO development bank designed to strengthen trade and security among member states.

The bottom line is that China, Russia, India, and Brazil are teaming up to fight against President Trump’s trade policies, among other things. India’s Prime Minister Modi committed to continuing to import Russian crude oil. This suggests that we are not likely to see trade agreements with either Brazil or India in the near future, and we will not likely see peace in Ukraine any time soon. And, a trade agreement with China looks unlikely in the near term as well. China finally has other countries to stand with it against President Trump’s policies. It really didn’t see any choice but to bear the pain of standing up against President Trump, because he was having success in exposing China’s strategy of dominance to much of the rest of the world. President Xi Jinping and the Chinese Communist Party are committed to their goal of becoming the #1 economy and military in the world. Yielding to Trump’s demands would have set those goals back many years, and the inner circle of China’s leadership doesn’t have that kind of time with many of its leaders being advanced in years. Yes, the fight is driving China deeper into debt, and the only way to prop up China’s economy during this battle is through additional heavy subsidies. But Xi continues to enjoy the support of the Chinese people, where he controls the message. The addition of Russia, Brazil and India to help in his fight against the United States further emboldens Xi. Trading partners are being redefined, and Xi is doubling down in his efforts to displace the dollar as the global currency. Doing so will be difficult, but he sees no other option. This means that U.S. agriculture must continue to focus on developing alternative demand options.

China’s Xi is also counting on outlasting President Trump’s tariff war, by Trump either losing legal challenges filed by Democrats, or by Democrats winning back Congress next year and impeaching Trump. A U.S. Court of Appeals for the Federal Circuit ruled Friday that President Trump exceeded his legal authority in declaring national emergencies to justify the tariffs. But the court also throughout part of the ruling that would strike down the tariffs immediately, giving Trump time to appeal the decision to the U.S. Supreme Court. Friday’s ruling does not cover Trump’s tariffs on foreign steel, aluminum and autos, nor does it include tariffs placed on China in his first term, which President Biden kept in effect as well. The president would still have some legal options for imposing tariffs if the Supreme Court rules against him in this case, but those options are more limited than the one currently in use.

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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Perspective: Morning Commentary for August 3

August 3 – Equities futures are pointing higher to open the week and month, still in range of recent record highs and flush with optimism that the U.S. and others will start to negotiate with Iran over the Strait of Hormuz. A busy week is on tap with earnings reports and jobs data, among other economic releases. Crude oil is down over $5 per barrel and nearing in on three-week lows. The dollar is only slightly lower this morning but at its own month-and-a half low, while the U.S. ten-year note is also slightly on the low side at 4.68. The VIX index is rebounding a bit today after a sharp slide into the end of last week, just above 16.

Matt ZellerMon, 03 Aug 2026, 12:45

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Perspective: Mid-Day Commentary for July 31

July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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