The September producer price index jumped 1.3% in September, for a year-over-year rise of 6.3%, the Labor Department reported Thursday, well above expectations and the hottest reading in over four years. It comes after a hotter-than-expected September consumer price index reading on Wednesday, with both reports showing signs that soaring energy costs are bleeding into the broader economy. “Energy prices rose 10.2% month over month in September, but this flatters the 20.3% and 21% gains in gasoline and diesel prices, which now sit above their levels from the onset of the Russian-Ukraine war,” said Matthew Martin, senior U.S. economist at Oxford Economics, in a note on the PPI reading. He noted that higher energy costs are also feeding through to the transportation and warehousing component of the PPI, which rose 3.4% in September after a 2.2% rise in August. The jump in diesel prices will continue to add upward pressure to this component through higher trucking costs, he said. Diesel prices also stand to lift food prices, which Martin said tend to be affected with up to a nine-month lag based on the timing of planting versus harvest season.
Wednesday’s jump in CPI sent Treasury yields soaring and lifted the U.S. dollar, with the closely followed ICE U.S. Dollar Index hitting an 18-month high and weighing on commodities. But a steep selloff in AI-related stocks subsequently triggered a flight to safety into Treasuries, pulling yields back down and sparking a pullback for the dollar on Thursday. Macro and financial market volatility are likely to continue to hold sway over the commodity markets.
Fed funds futures traders priced in a roughly 28% probability the Federal Reserve will deliver a quarter-point rate hike later this month, down from 33% following the CPI report Wednesday.
Global investors will be hanging on every word when Federal Reserve Chairman Kevin Warsh speaks at an International Monetary Fund event in Thailand at 10:30 p.m. CT. Warsh’s remarks come just ahead of the start of the central bank’s communications blackout ahead of the Oct. 27-28 policy meeting.
Market recap… Soybeans led the way lower Thursday, falling after NOPA reported a larger-than-expected drop in September crush. That said, the low crush appeared to be more of a supply issue than a demand proble, resulting from last month’s western Corn Belt harvest delays. Crush was 196.300 million bushels, down 4.5% from August and 0.8% below September 2025. November soybeans dropped below last week’s reaction low set after the October WASDE report. Corn and wheat futures were dragged lower, with December corn finishing below the 200-day moving average, which had been providing support.
- November soybeans fell 14 ¼ cents to $12.63 and hit a six-week low.
- December soybean meal dropped $4.70 to $359.80.
- December soybean oil ticked up 9 points to 67.15 cents.
- December corn closed at $4.78, down 2 cents.
- December SRW fell 3 ¼ cents to close at $6.70.
- December HRW shed 2 cents to end at $7.13.
- December spring wheat lost 4 cents to $6.86.
- December cotton futures closed 60 points lower at 80.06 cents.
- December live cattle rose $2.125 to finish at $227.25. November feeder cattle rose $3.50 to $341.95.
- December lean hog futures rose $0.50 to $66.575.
Tractor sales tank… September was another tough month for U.S. tractor and combine sales. The Association of Equipment Manufacturers this week said total two-wheel drive tractor sales totaled 14,791, down 16.4% from the same month last year, the association said. Four-wheel drive sales of 233 units were down 20.2%, while self-propelled combine sales at 369 were down 10.9%. For the year to date, two-wheel drive tractor sales are down 12.5%, four-wheel drive tractors are down 23.4% and combines are down 9.4%.
‘Broken barometer’... The rate of Iranian attacks on ships has increased significantly in October, with reports indicating at least 12 attacks in the last two weeks, said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a note. Several of the ships attacked this month were transiting the southern route near Oman under U.S. protection, she noted. Despite these risks, regional exports have hit new highs, with around 18.6 million barrels a day of crude loading in the region on average in recent weeks, partly due to the U.S.-led naval escort operation. “However, with the rate of attacks increasing and shipping costs soaring, we maintain that rising export levels are a broken barometer for measuring the geopolitical pressure building in the Middle East,” Croft said.
USDA’s Rollins welcomes falling beef prices… The September consumer price index released Wednesday showed inflation surging due to sharply higher fuel prices, though prices for food items were flat. Beef prices, a top concern of the White House ahead of next month’s midterm elections, continued their recent retreat, the data showed, with the CPI report’s beef index logging a fall of 1% and ground beef declining 0.8%. “Beef prices just saw their BIGGEST monthly drop since 2024!” Rollins wrote in an X post. “That marks THREE consecutive months of declining beef prices — welcome progress for American families at the grocery store.” She continued that under President Donald Trump, “we’re fighting to lower grocery costs, rebuild America’s cattle herd, strengthen domestic beef production, and put American ranchers FIRST.” A decision by the Trump administration to allow increased imports of foreign beef has drawn anger from beef producers and criticism from farm-state Republicans. Democrats and independents have sought to capitalize on the issue in political ads and on the stump, Politico reported earlier this week.