Perspective: Morning Commentary for November 18

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 18 – Stock futures are again weaker this morning following Friday’s selloff as traders take profits on the post-election Trump rally as they assess the impacts of higher Treasury yields post-election, while also considering the implications of a Biden Administration decision to allow Ukraine to use U.S. weapons for deep strikes into Russian territory. The VIX is trading near 16 this morning, while the dollar index trades near 106.6. Yields on 10-year Treasuries are trading near 4.45%, as they sit poised for a possible retest of resistance at the 4.50% level, while yields on 2-year Treasuries are trading near 4.30%. Crude oil prices are trading 1% higher this morning as bargain buying again emerges near $67 per barrel. The grain and oilseed sector traded mixed overnight, with wheat prices bouncing, while soybeans led corn lower amid good Brazil growing conditions.

President Biden reversed previous policy to allow Ukraine to use weapons obtained from the United States to make strikes deep inside of Russia. It is believed that the decision will help Ukraine hold onto captured territory in Kursk for use in peace talk negotiations with Russia, but it may also be reversed again when Biden hands over the White House keys to Donald Trump on January 20^th – a little over 60 days from now. It’s also not known how many missiles Ukraine has left to fire into Russia for the war that will hit its 1,000^th day tomorrow.

China’s economy survives on outside foreign investment, which is a big reason why its leaders are worried about the West deleveraging. Foreign direct investment in China totaled $96.3 billion in the first 10 months of this year, but that was down nearly 30% year-on-year, according to China’s Ministry of Commerce. It reported that 11.6% of the FDI went to high-tech manufacturing, which is a 0.7% year-on-year increase for the sector. October FDI totaled $7.27 billion, down $8.34 billion the previous month. Foreign investors are expected to be cautious until they see how things play out with the incoming Trump Administration. The best indication currently of such is his picks to serve on his cabinet. Those picks have thus far been somewhat unconventional from normal Washington politics, which continues to add somewhat to the uncertainty for those who are used to “business as usual” in Washington, D.C.

Soyoil prices surged Friday after China’s finance ministry announced that it would either reduce or cancel export tax rebates for a long list of products and commodities, with used cooking oil being among those products. Used cooking oil started flooding the United States last year, replacing soyoil and canola oil as a feedstock used in the production of the green diesels. Used cooking oil is assigned a more favorable carbon intensity score by the U.S. Environmental Protection Agency, garnering it a larger subsidy when used as a feedstock in biofuel production. However, the impact on soyoil and canola oil demand remains uncertain, particularly since California is leading the way in a push to limit use of sunflower oil, canola and soyoil to no more than 20% of the feedstock used in the production of green diesels as a way to push the industry toward electric vehicles. As such, soyoil prices pulled back again in overnight trade.

Rains continue to fall across much of Brazil, supporting strong crop conditions. The rainy season started late in Center-West Brazil, delaying the start of soybean planting, but the rains have continued strong since that point. In fact, Center-West Brazil, which includes Mato Grosso and the surrounding areas, has received nearly 8” of rain on average across the region over the past 30 days, supporting good crop development in the region, with planting progress now in its final stages at near a normal pace. That means that Center-West Brazil is virtually planted, while planting continues to progress in other areas of Brazil. We should see the first soybeans harvested in Brazil starting in the next 45 days, although it will be closer to 60 days before we see notable quantities of new-crop soybeans.

Soyoil prices erased Friday’s gains overnight, allowing soybeans to drop lower as well. In fact, the November 2025 contract hit fresh lows for the move overnight as the focus shifts to the large Brazil crop coming after the first of the year. Falling soybean prices acted as a weight for corn prices as well, although rising wheat prices minimized losses for corn. Wheat prices uncovered value buyers again following the recent post-election selloff amid ideas that the downside risk for Russian cash wheat prices may be shrinking. Export quotas for the last half of Russia’s marketing year are expected to shrink dramatically – likely near 10 – 12 mmt – allowing global cash prices to firm at that point. Meanwhile, corn export demand remains strong, driven primarily by sales to “unknown destinations” that are nearly 200 million bushels above where they were at this time last year. I doubt that this represents sales to China. Rather, it likely reflects an assortment of buyers and resellers getting coverage at what they see as multi-year lows amid the possibility that we could see higher global cash prices down the road.

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