Perspective: Morning Commentary for April 25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 25 – Stock futures pulled back modestly overnight on trade uncertainty, although there are glimmers of hope. The VIX is trading below 27 this morning, while the dollar index firmed to trade near 99.7. Yields on 10-year Treasuries are trading near 4.27%, while yields on 2-year Treasuries are trading near 3.79%. Crude oil prices are modestly weaker, while the grain and oilseed sector traded modestly higher overnight.

Are there signs of de-escalation in the China trade war? Perhaps so, but these are very early signs that still leave us a long way from an agreement. It started with talk out of the White House of possibly cutting tariffs in half, although that was later refuted by President Trump. Members of Trump’s cabinet spoke of the need to de-escalate, saying that current tensions were unsustainable. President Trump told reporters that conversations are happening with China, and that they’re good, while China denied that any formal negotiations are taking place. I believe that both statements are true. China considers formal negotiations to be face-to-face negotiations, but there probably are informal conversations taking place at various levels.

Today we learn that China is considering exempting certain necessary items from its 125% retaliatory tariffs. The initial focus appears to be on exempting imported medical equipment, ethane and plane leasing. Furthermore, a task force operating for China’s Ministry of Commerce is said to be requesting input from the industry of additional items that need to be exempted. We saw this pattern in Trump 1.0, with China even exempting U.S. soybeans when it actually needed to buy them. This suggests that China may be willing to soften its position to support its own economy, and to prevent rising costs at a time when consumer sentiment remains near record low levels.

Is the tariff war hurting China more than the United States? China doesn’t believe so. It believes that its citizens are better prepared to stand up to the “bullying” being done by America, with deeper savings and willingness to sacrifice. Whether that is true or not is subject to debate. But what matter is, that’s what China’s leaders believe, and right now there is a strong sense of nationalism in China to back that up. As such, I don’t expect China to roll over until / unless greater pain is felt. The willingness to consider exemptions, as stated above, suggests that there is some pain though. China’s stock market remains propped up by inflows of money from state-backed institutions, but trade and manufacturing is being impacted. Layoffs have started, as I stated yesterday.

Goldman Sachs surveyed 46 enterprises whose products comprise 70% of China’s export value to the United States. That survey revealed that the tariffs severely impacted 41% of the products, with 36% negatively impacted and 23% slimly impacted. The survey revealed that 60% of Chinese producers are negotiating prices with U.S. buyers to consider passing or sharing the tariff burden. U.S. importers are also placing orders from alternative sources, mainly in Southeast Asia, Mexico and India to fill the gap. The survey suggests that they should be able to maintain a stable supply for most products, although there may be some shortages and empty shelves in the U.S. Most major suppliers keep a two to six-month supply as a buffer, but some smaller independent supplier may encounter shortages that keep them from keeping their shelves stocked. Chinese shipping data suggests that demand for containers moving from China to the United States rose by 10% year-on-year in the first quarter of this year as suppliers stocked up, but they’re expected to fall by 15% in the second quarter and fall by 27% on the year in the third quarter if this trade war continues.

In the end, it comes down to who loses the most political capital first – Xi Jinping or Donald Trump. Neither face an upcoming election. Xi is president as long as he wants and Trump is in his final term in office, although he can only lead so far as Congress allows him to do so. As such, Xi has to worry about losing the trust of his people and Trump must maintain the support of his party. For his part, Trump needs to start producing hard evidence that his strategy is working – namely trade deals with major trading partners. Xi needs to keep his economy from collapsing. The current standoff is unsustainable. Both need a “way out” that allows them to look strong before their constituency. It appears that they are slowly finding that “way out” via the informal talks that are going on behind the scenes. That won’t produce a trade deal, but it may ease the tensions enough to allow those formal talks to start.

The soybean complex continues to be supported by the soyoil market, as investors anticipate a possible announcement from the U.S. Environmental Protection Agency today on the biomass diesel production mandate. That pushed soyoil prices to their highest level since December 2023, with soybeans at two-month highs. Additional support for the grain and oilseed complex comes from the above signs of thawing in the China / U.S. trade war, although gains are limited by the ongoing uncertainties ahead of the weekend, along with a more favorable weather outlook in key growing areas for many of these products. Headlines will continue to drive sentiment.

This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.

The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.

References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.

StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.

StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorised and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorised to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorised and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorised by the FCA.

StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism. SAP is an “Approved International Trading Company” authorized to act as a “Spot Commodity Broker” under the Commodity Trading Act.

StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licensee (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for cross-border money transfer service).

SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.

StoneX Financial (HK) Limited (CE)No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.

StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.

StoneX Securities Co., Ltd. (“SSJ”)(Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.

Explore subscriptions

StoneX: We open markets

Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.

Reach

With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency

As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise

From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.

Tell us about yourself. Are you a:

First name

Last name

Company

Country

Province/Region

By submitting this form, you are sending StoneX Group Inc. and its subsidiaries your personal information to be used for marketing purposes. View our Privacy notice to learn more.

First name

Last name

Company

Account number

Account holder name (if different from above)

By submitting this form, you are sending StoneX Group Inc. and its subsidiaries your personal information to be used for marketing purposes. View our Privacy notice to learn more.

Perspective: Morning Commentary for April 25

Discover more insights

Asia Soybean Daily Report - 21 May 2025

Asia Palm Oil Daily Report - 21 May 2025

Corn: bullish momentum confirmed