The Weekender

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We started the week with a bang on optimism surrounding the Trump–Xi meeting.

By Friday, it was back to hurry up and wait. Xi departed for China without any major new agricultural announcements, and corn, soybeans and wheat all traded to one-month lows before making up a little ground into the close.

But while all eyes were on China, soybean meal continued to lead the way.

Rain slowed harvest across parts of the western Corn Belt, leaving crushers scrambling to bridge the gap from old crop to new.

With Xi back in China, attention turns to harvest, Wednesday’s September 1 Grain Stocks and wheat production reports and two wars that refuse to go away. Washington says agriculture is included in the new $30 billion tariff framework, but we still don’t have the details that matter most to the market: which products, what tariff relief and whether any additional purchase volumes come with it.

To ban or not ban…

Diesel got its turn on the headline roller coaster last week as Washington sent mixed signals and industry pushback grew louder. Trump floated limiting U.S. diesel exports Tuesday in response to runaway prices. By Wednesday, reports of a possible 90-day suspension sent ULSD into a nosedive. Thursday, the White House denied plans for an outright ban, sending diesel higher early before renewed U.S.-Iran talks knocked it right back down. Even with Friday’s rebound, October futures still finished the week 37 cents lower, down 7.9%.

The 30-minute chart below says it all: up, down and all over the place depending on the latest headline.

Trump continues to keep the idea alive, saying over the weekend that the administration is still looking at a diesel export ban “very seriously.” I still have a hard time seeing an outright ban actually happen, especially given how quickly the market has shown it can create problems elsewhere.

Crude followed a similar path last week, whipsawed between hopes for progress with Iran and reopening the Strait of Hormuz on one side, and more Houthi attacks on the other. WTI traded above $97 Monday, fell below $89 Tuesday, then clawed back part of the break to finish the week near $92 — down 3.8%.

WTI traded as much as $12 below Brent Thursday, the widest discount since May, as markets priced in lower U.S. refinery runs if diesel exports are restricted. The idea is simple: trap more diesel at home, storage fills, refiners cut runs and demand for U.S. crude falls — while high freight costs make it harder for cheaper U.S. barrels to move overseas.

Interest rates continue to add another layer of pain. The 10-year Treasury pushed above 5.18% Friday, its highest level since 2007, as stronger economic data and stubborn inflation increased expectations for another Fed hike this fall. Higher energy prices are only adding to the inflation concern, which means borrowing costs are moving higher in tandem.

The U.S. Dollar Index traded above 101 for the first time since late July as rising Treasury yields and expectations for another Fed hike kept support underneath the dollar. It eased Friday but still posted a second straight weekly gain, with October hike odds rising to roughly 66% from 58% a week earlier.

It was all eyes on China last week but meal still stole the show.

Meal continues to lead the complex, with October finishing the week up more than $19 near $374 as futures pushed to new contract highs and the western cash market tightened further. Cash remained above delivery, Iowa rail offers were still basically nonexistent and nearby meal receipts continued to be cancelled as crushers struggled to bridge the old crop/new crop gap.

It goes back to the same problem we talked about in Thursday’s HOT TAKE: western crushers need beans, and they are willing to pay whatever necessary to get them. While +100X basis may seem like a dream come true, that is nothing compared with market chatter of more than +200X paid by another western crusher late in the week.

It’s easy to see where the problem is. Widespread rainfall of 2 inches or more fell across parts of the Plains, western Corn Belt and into the east last week, bringing harvest to a crawl. Localized totals topped 5 inches in some areas.

What. A. Map. Month-to-date totals across Iowa and surrounding areas has reached 4, 6 and even double digits in some spots. The problem isn’t the size of the crop, it’s getting it out of the field at this point.

This sums it up well:

And if you were thinking things are going to get better… think again:

Meal’s strength and harvest delays are working their way into bean spreads. The Nov–Jan bean spread narrowed 3 cents to a 13.5-cent carry as strength in western cash markets pulled the spread off the prior week’s lows.

Cash is king. Basis first, spreads second, futures third.

Beans spent the week caught between meal strength and China headlines, going nowhere fast. China optimism kicked off the week with double-digit gains, only for November futures to give most of it back. Friday, beans fell 20 cents and briefly traded below $13 before recovering to close at $13.19.

Zoom out and the market looks even more stuck. November beans have spent nearly all of September chopping between $13.00 and $13.30. It feels a lot like the market we lived in for months into April, when beans were trapped in a 20-cent range in the mid-$11s.

China’s visit didn’t give beans anything tangible enough to break out of that range. The White House said agricultural goods are included in recommendations for more favorable tariff treatment covering $30 billion of goods in each direction and launched an agricultural market-access working group, but there were no new commodity-specific purchase volumes announced.

The only hard purchase commitment was for China to buy at least 10 MMT of U.S. coal in both 2027 and 2028. And… we’re getting two pandas. Not exactly the soybean headline the market was hoping for.

Friday initially looked like a sell-the-news washout. November beans broke below $13 before USTR Jamieson Greer said agriculture was included in a subset of goods the two sides had agreed to trade on more favorable terms, with additional details coming Monday. Beans reversed to close more than 20 cents off the low, while corn followed suit.