Record diesel prices and a quarter-point interest rate increase from the U.S. Federal Reserve shaped market sentiment this week, with analysts noting mostly steady trade despite cost pressures and geopolitical risks.
Analysts speaking on a Friday, Sept. 18 market wrap said the Fed’s unanimous quarter-point hike signaled the central bank’s view of the current economy. While immediate market reaction was muted, they cautioned that the longer-term path is a concern, with the possibility of another increase later this year and potential rate cuts not arriving until the end of 2027. They noted it was the first increase in three years and expected the move to temper spending.
Record diesel prices and crude strength
Rising crude and record diesel prices are already slowing spending, according to the analysts, as higher fuel costs filter through transportation and delivery for a wide range of goods. They attributed elevated crude in part to the conflict between Russia and Ukraine, where energy infrastructure has been targeted.
One analyst said ramifications are spreading, citing reports that Saudi Arabia will be unable to deliver fuel to Europe for October. He added that such strains could prompt broader international pressure to resolve the conflict sooner rather than later.
Soybean sales to China continue
U.S. soybean sales to China continued with a purchase reported Friday, the analysts said. China has now bought more than half of the volume it was said to have agreed to take, and at the current pace, the full commitment could be covered by late October or early November.
Attention is turning to the expected meeting next week between President Donald Trump and President Xi Jinping and what it may mean for additional trade agreements. One analyst expressed hope the talks would address the 10% tariffs each country has in place on the other’s goods.
Rain slows early harvest outlook
On weather, the analysts said rainfall has increased over the past week, pushing back early harvest expectations. They were not yet concerned about overall harvest prospects given how early it is. However, they cautioned that additional moisture could begin to affect crop quality.
“The crop is almost ready to go, and seeing this rain right now, it would have been nice to have it a month ago,” one analyst said, adding that current showers may be doing more harm than good.
Cattle markets and industry chatter
The cattle market swung throughout the week. The Cattle on Feed report due late Friday was expected to be supportive, which analysts said could help recoup recent losses.
At the Big Iron Farm and Construction Show in West Fargo this week, producers frequently mentioned the timing of rains. While less than ideal for harvest readiness, many hoped the moisture would help recharge soil reserves.
Farmers also voiced concerns about high input costs and the expense of putting the 2027 crop in the ground, with budgets and marketing strategies weighing on decisions. Some also discussed how USDA yield and output estimates were shaping grain price expectations heading into harvest.
(The market discussion referenced is sponsored by FMNE Insurance.)