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Treasury yields extended their surge on Tuesday, indicating traders expect inflation pressures to continue to build. The yield on the 30-year Treasury bond hit its highest since 2002, hitting 5.594%. The rout in the bond market (yields rise as Treasury prices drop) has been tied to inflation concerns surrounding the war in Iran and escalated fighting between Russia and Ukraine. Of note, however, Tuesday’s rise in yields came as oil and fuel prices eased somewhat, indicating that inflation worries have become entrenched.
Heavy corporate bond issuance has also been a factor, along with mounting worries about the high tide of government debt in the U.S. and other developed economies.
Rising U.S. yields, meanwhile, have put upward pressure on the U.S. dollar – a headwind for commodity prices. The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, rising 0.2% at a two-month high.
- Something to watch: Bloomberg notes that short positions by speculators betting on a further rise in yields are at a two-decade high. Extreme positioning could lead to a violent unwind of those positions if the economy shows signs of cooling.
Market recap: Soybeans bounced Tuesday, finding support on short covering following the previous session’s rout.
- November soybeans rose 9 ½ cents to $12.97 ¾.
- December soybean meal fell 40 cents to $359.
- December soybean oil rose 70 points to 68.36 cents.
- December corn lost 1 cent to $5.22.
- December soft red winter wheat rose 4 cents to $6.92 ¾.
- December cotton slumped the 400 point daily trading limit to 78.76 cents, hitting a nine-week low on heavy fund long liquidation and selling tied to further strength in the U.S. dollar, with a key index that tracks the value of the currency hitting a two-month high (see item above).
- December live cattle ended steady at $220.80, while November feeders rose $1.625 to $330.90.
- December lean-hog futures rose $1.30 to $69.79.
Overthinking the China list? The recovery by soybeans in Tuesday’s session was a relief after Monday’s reaction to the crop being left off the so-called 30-for-30 list of products the U.S. and China would consider for reductions of country-specific tariffs. Wheat, corn and sorghum made the list, while the omission of soybeans led to speculation that China was looking to government leverage over purchases, since only state-owned firms would be viable buyers without the reduction of Beijing’s 10% duty. Fred Gale, a retired USDA economist who runs the Dim Sums blog focused on China’s agricultural markets, said the explanation is likely more mundane.
He wrote in a Monday post:
- Commentators interpreting the exclusion as a Chinese attempt to maximize bargaining power are probably reading too much into it. The lists were assembled to total $30 billion of Chinese imports, and soybeans had a value of $12 billion in U.S.-China trade in 2024. So inclusion of soybeans would have squeezed out hundreds of other items from the $30-billlion list. The soybean exclusion is also consistent with the practice of treating soybeans separately from other products that began with last October’s purchase commitment for 25 million tons of soybeans annually.
The lowdown on the harvest low: A study by University of Illinois agricultural economists published in a farmdoc daily paper earlier this month analyzed 2010–2025 elevator data across 12 Corn Belt states to evaluate how harvest pressure impacts local corn basis.
So what did they find when it comes to harvest pressure? Here are some key takeaways:
- Timing and Depth: Across the Corn Belt, the seasonal corn basis bottoms in mid-October – coinciding with the midpoint when the U.S. corn crop reaches 50% harvested. The regional average decline is roughly 11 cents per bushel below late-November baseline levels, remaining near its trough for about five weeks before recovering.
- Geographic Variation: Aggregate averages understate local weakness. State-level median basis declines range from 6 cents in peripheral states (e.g., Michigan) to 19–29 cents per bushel in central areas like Illinois, Indiana, and Missouri, where river transport and heavy grain flows amplify pressure.
- Financial Impact: In Illinois, selling corn across the scale at the seasonal trough costs producers an average of 19 cents per bushel (roughly $40 per acre at 2026 yield estimates) compared to waiting a few weeks.
The bottom line, according to the paper, is that deferring delivery past the local basis trough allows growers to capture sharp basis recoveries. However, gains must be balanced against storage, handling, and potential counteracting moves in futures prices.
California enacts PFAS tracking pesticide bill: California will now require the tracking of pesticides that contain “forever chemicals,” noted a Reuters report. Legislation signed this week by Gov. Gavin Newsom requires California’s Department of Pesticide Regulation to indicate whether ag pesticides contain perfluoroalkyl and polyfluoroalkyl substances, or PFAs, when reporting their use in a public data base.
Get ready for quarterly grain stocks data: Wednesday will bring the 11 a.m. CT release of USDA’s latest quarterly Grain Stocks Report, including final stock figures of the 2025-26 marketing year for corn and soybeans and details on first-quarter wheat use. The trade sees corn stocks coming in modestly below USDA’s September WASDE figure after use remained strong going into the final month of the marketing year, notes Pro Farmer’s Lane Akre. The key, he writes, will be how the Feed & Residual figure stacks up. USDA has Feed & Residual at a record 6.35 billion bushels for the marketing year. USDA will give its final update to 2025 production in this report as well. Analysts pegged 2025 production at 17.003 billion bushels, a modest revision to USDA’s latest figure of 17.021 billion bushels. The drop in production explains analysts drop in ending stocks. See: What to expect from USDA’s September 30 Reports