The Weekender

Last week had a little bit of everything.

Pro Farmer’s crop tour pushed corn into the $5 promised land, soybean oil went on a headline-driven roller coaster, China kept buying, diesel continues to lead and Washington found new ways to keep things interesting.

War and energy markets remain front and center, although Washington — in its infinite wisdom — managed to steal the spotlight this week.

Diesel has doubled — twice over. ULSD is up 115% YTD and 102% over the last twelve months, the only major contract on the board that has more than doubled in both windows. The diesel crack traded above $100/bbl for the first time ever this week. Crude is not the problem. Refining capacity and available distillate barrels are, pushing front-month futures to $4.50 to close out the week while wholesale heating oil is getting dangeroulsy close to $5 per gallon - something that hurts both the US farmer, households heading into winder and the broader economy.

Distillates enter fall with little cushion. U.S. inventories remain uncomfortably tight just as seasonal fuel demand is set to ramp up. Russia’s fuel export restrictions remain in place into January, adding another layer of pressure to an already-tight market. Every refinery outage or supply disruption just adds fuel to the fire — literally.

U.S. federal debt crossed $40 trillion on Wednesday. It took nearly two centuries to accumulate the first $1 trillion… and less than five months to add the latest trillion. Debt-to-GDP now sits near 123% — and keeps climbing.

If you want to see something scary, click HERE for the U.S. National Debt Clock.

And in the four days since crossing $40 trillion, we’ve already added another $65 billion.

And the bond market is starting to notice.

Long-dated Treasury yields pushed to their highest levels in nearly two decades last week as investors demanded more compensation for the combination of massive government borrowing, sticky inflation and a flood of new debt hitting the market.

That pressure spilled into the dollar as well.

The U.S. Dollar Index fell 0.9% on the week to a three-month low near 98.80, pressured by Treasury’s decision to double long-dated debt buybacks, which pulled yields lower and added to concerns around the growing deficit and longer-term inflation.

Soybeans: the little engine that could.

It was a big week for November beans, up 47 cents and closing near $12.40 Friday. Strength in corn (who would have thought), Pro Farmer’s crop tour, a weaker dollar and continued Chinese buying all added support. Since the August 12 report, beans have closed lower just twice — and only by 1 cent and ¾ cent — while still managing to trade nearly 75 cents off the low over that stretch.