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Source: CNBC

Chicago soybean futures surged Thursday, driven by comments from U.S. President Donald Trump indicating that China is ramping up its purchases of U.S. agricultural products.

The most-active soybean contract on the Chicago Board of Trade (CBOT) gained 0.8% to trade at $11.01-1/2 a bushel as of 0412 GMT. In contrast, other major grains softened, with CBOT wheat falling 0.2% to $5.25-1/2 a bushel and corn dropping 0.2% to $4.28-1/2 a bushel.

Trump's Comments Trigger Market Optimism

The rally in soybeans gained momentum after the commodity hit a two-month high on Wednesday. The move followed a post on President Trump's Truth Social platform stating that China is "lifting the soybean count to 20 million tons for the current season." He added, "They have committed to 25 million tons for next season!"

This development is significant as China had largely withdrawn from the U.S. soybean market during the prolonged trade war between the two nations. Traders are now closely monitoring for any further signs of renewed buying interest.

"Typically Chinese purchases of U.S. soybeans taper off from January," noted Sean Hickey, an analyst at Bendigo Bank Agribusiness. "Regardless, the lift to 20 million metric tons of U.S. soybean purchases will add some much-needed boost to the soy complex."

By late January, China had already purchased approximately 12 million tons of U.S. soybeans, fulfilling a commitment announced after a trade truce in late October began to thaw relations.

Record Brazilian Supply Limits Price Gains

Despite the bullish news, gains in the soybean market were capped by the prospect of ample global supply, primarily from South America.

Brazil, the world's top soybean producer and exporter, is in the process of a rapid harvest of what is projected to be a record-breaking crop. "An all-time record Brazillian crop, which is being quickly harvested, will soon begin to capture Chinese demand," Hickey explained.

This supply pressure is expected to continue. On Monday, consultancy firm StoneX raised its forecast for Brazil's 2025/26 soybean production by 2.3% from its January projection, now anticipating a crop of 181.6 million tons.

Looking ahead, China is expected to rely heavily on Brazilian soybeans through the first half of 2026. Record production levels and competitive pricing are set to drive shipments from Brazil, even as U.S. supplies become available. This pattern was evident last year when China's soybean imports from May to October hit record highs, with buyers favoring South American cargoes to avoid the elevated tariffs on U.S. products.

Diplomatic Signals And Immediate Market Reaction

Trump’s Rhetoric And The Volatility Channel

Market Structure Signals Ongoing Supply Anxiety

Source: CNBC

Indonesia's economy expanded by 5.11% in 2025, posting a modest acceleration over the 5.03% growth recorded in 2024. The performance, driven by a rebound in domestic demand, fell short of the government's 5.2% target but landed within Bank Indonesia's forecast range of 4.7% to 5.5%.

While the full-year figure points to resilience, it also highlights significant challenges facing Southeast Asia's largest economy.

Exports and Holiday Spending Fuel Growth

A strong export sector was a primary engine of economic activity. According to Statistics Indonesia, exports grew 6.15%, powered by increased shipments of key commodities like palm oil, iron, and steel. Notably, exports of nickel and its derivatives to China, along with electronics, textiles, and footwear to the U.S., saw double-digit increases despite "reciprocal" tariffs from the Trump administration.

Domestically, the economy saw a late-year surge, with GDP expanding 5.39% year-on-year in the fourth quarter, up from 5.04% in the third. This boost was largely attributed to seasonal consumer activity, as household consumption and transportation spending rose during the Christmas and New Year holidays. However, this occurred even as severe floods and landslides in northern Sumatra caused substantial economic losses.

Major Headwinds Challenge Prabowo's 8% Goal

Despite the positive headline numbers, several underlying weaknesses pose a threat to President Prabowo Subianto's ambitious goal of achieving 8% annual growth by 2029.

Mass layoffs across industries from textiles to tech startups in recent years have weakened consumer purchasing power and slowed private consumption. This internal pressure is compounded by external challenges, including ongoing trade wars and geopolitical tensions.

Domestic market stability has also been shaken. Key concerns include:

• The Indonesian rupiah fell to a new historic low against the U.S. dollar last month.

• A warning from global index provider MSCI triggered a stock market sell-off.

• The market rout led to the resignations of the chiefs of both the stock exchange and the Financial Services Authority.

Stimulus Spending Pushes Deficit to Legal Limit

To support the economy, the government deployed a 110.7 trillion rupiah ($6.6 billion) stimulus package in 2025. The package included utility bill discounts, value-added tax incentives, and social assistance for low-income families. This spending was separate from the 71 trillion rupiah allocated to major programs like President Prabowo's free meals initiative for children.

Finance Minister Purbaya Yudhi Sadewa acknowledged that the state budget was critical to sustaining growth. However, this fiscal support pushed the budget deficit to 2.92% of GDP, bringing it dangerously close to the legal ceiling of 3%.

Defending the strategy, Sadewa told reporters last month, "I can make the deficit zero, but the economy would be in disarray." For the coming year, the government is targeting a growth rate of 5.4%.

Lebanon's Economy Minister, Amer Bisat, has openly acknowledged the deep crisis of confidence plaguing the nation, admitting that trust from both Arab and local investors was "lost very quickly" during its prolonged economic collapse. Since 2019, the country has been mired in a severe financial crisis, fueled by decades of corruption and government mismanagement.

The fallout has been catastrophic. The collapse has decimated economic output, drained public finances, and shattered faith in state institutions. For ordinary people and businesses, it has meant losing access to their own money trapped in the nation's banking system. With investors wary and reform efforts stalled by political gridlock, the path to recovery remains fraught with challenges.

"Our relationship with our Arab investors is as fractious or problematic as it is with the Lebanese investors," Bisat stated at the World Governments Summit in Dubai. "Let's not forget that we all went through a horrible period."

A Plan Without Funding

According to Bisat, the Lebanese government is now focused on practical measures to slowly rebuild trust and showcase the country's economic potential. "Our objective is to look forward and regain confidence," he said. "We're trying to do the serious hard work of bringing back confidence, slowly but surely."

While a recovery strategy is in place, its success hinges on external support. "We have the plan," Bisat confirmed, but "the money has to come from our friends."

Lebanon’s priority is to secure this funding through grants and highly favorable loans rather than taking on more debt. "We want to borrow them at concessional rates, very cheap interest rates. We need the money," he explained. The country's ability to access traditional capital markets is virtually non-existent, underscored by a 'C' sovereign rating from Moody's, reflecting ongoing defaults and deep financial distress.

Rebuilding Crucial Ties with Gulf Nations

For decades, investment from Gulf countries was a vital source of foreign currency for Lebanon. However, the financial crisis, compounded by tensions over the influence of the militant group Hezbollah, led many Gulf states to pull back.

The challenge of attracting investment was highlighted when the UAE-based Al Habtoor Group announced it would halt all its operations in Lebanon, which include a major hotel and a theme park, amid a legal dispute with the government.

Despite such setbacks, Beirut is pushing to signal that it is open for business. Bisat pointed to a government-organized conference in November that attracted 50 international firms, including Goldman Sachs, Accor, and BlackRock. "They're interested in Lebanon," he insisted. "Lebanon has so much opportunity."

The Slow Thaw in Relations

While most Gulf nations remain hesitant to commit significant capital until Lebanon implements reforms approved by the International Monetary Fund, there are signs of a cautious re-engagement. Qatar has taken a notable step, announcing over $430 million in aid to help stabilize Lebanon's struggling energy sector.

Diplomatic engagement has also intensified. Bisat noted increased bilateral visits and interest from Gulf sovereign wealth funds since the current government took office. "You can see it at many levels," he said, citing renewed contacts with the UAE, Kuwait, Qatar, and even Saudi Arabia after years of silence. "The engagement is there. And more important than the engagement is the attitude. The attitude is very positive."

The Saudi Arabia Challenge

Restoring a full relationship with Saudi Arabia is a top priority. Lebanon is focused on three key areas:

• Removing restrictions on Lebanese exports.

• Enabling the return of Saudi tourists and business people.

• Advancing economic, cultural, and environmental agreements.

Saudi Arabia was Lebanon's leading market for agricultural exports in 2019, but Riyadh suspended imports of fruits and vegetables in April 2021 over drug-smuggling concerns. A travel ban for Saudi citizens has also been in place since 2021 due to security issues. To mend this, Lebanon must demonstrate it is taking control. "We need to assure them that we're not exporting drugs," Bisat said, noting efforts to improve technical controls and scanning systems.

Ultimately, deeper engagement from the Gulf depends on tangible progress. "We have to do our homework," Bisat concluded.

Future Ambitions: Economic Zones and Tech Hubs

Looking ahead, Lebanon has plans for a southern economic zone, a project first raised by U.S. officials as part of a broader stabilization effort. However, Bisat clarified that discussions are premature. "The first thing is that the war has to finish," he stated, referring to the ongoing hostilities with Israel. Rebuilding the south remains a "huge priority, socially, morally, politically." The World Bank estimates the cost of reconstruction and recovery from the war at $11 billion.

In the meantime, the government is advancing other economic zone projects in Tripoli and at the Beirut port. The strategy also includes a significant push into high-end technology.

"We now have virtual free zones for tech," Bisat said, adding that Lebanese companies are already producing advanced technology, including "chips for AI that Nvidia is buying." This focus on innovation represents a key part of Lebanon's vision for a post-crisis economy.

The Gulf's Strategic Shift on Iran

For years, Oman's quiet diplomacy with Iran was an outlier in the Gulf, viewed with suspicion by its neighbors. Muscat’s insistence on keeping channels open to Tehran, even during peak regional tensions, often isolated it within the Gulf Cooperation Council (GCC). Some partners saw this as naive; others, as unhelpfully independent.

That perception has dramatically changed. By January 2026, with the threat of a US-Iran conflict looming, Gulf monarchies were actively lobbying the White House to support talks in Muscat. What was once seen as a weakness is now considered an essential tool for regional stability.

The urgency of this new reality crystallized in mid-January 2026. As fears of a US strike on Iran grew amid Tehran's crackdown on protests, a senior Saudi official confirmed a "frantic, last-minute" diplomatic push. Led by Saudi Arabia, Qatar, and Oman, the effort aimed to persuade President Donald Trump to stand down and give Iran a chance to de-escalate.

This was no symbolic gesture. The move followed a temporary drawdown of US personnel from Qatar's Al-Udeid Air Base and a flurry of security warnings from regional embassies. Gulf leaders were scrambling to prevent a conflict they feared would spiral out of control.

Why a US-Iran Conflict Is a Red Line

The region's leaders now recognize that a US-Iran war would be devastating for everyone involved. The consequences would be immediate and severe:

• Economic Shock: Oil markets would convulse, and investor confidence would evaporate.

• Direct Retaliation: Iranian counter-strikes would almost certainly target Gulf states.

Vivid memories of the 2019 strike on Saudi oil facilities and Iran's June 2025 attack on Al-Udeid—which followed US strikes during a 12-day Israel-Iran war—underscore how quickly escalation can cross borders.

By 2026, even Saudi Arabia, Iran's traditional rival, shifted its stance from spoiler to a cautious stakeholder in de-escalation. The debate within the GCC was no longer whether to engage with Iran, but how to keep Washington and Tehran from triggering a war. This marks a profound evolution in how the Gulf views Oman’s unique diplomatic role.

Oman's Proven Record as a Mediator

Oman's central role in this crisis is no accident. On January 10, 2026, Omani Foreign Minister Badr bin Hamad Al Busaidi visited Tehran, meeting with President Masoud Pezeshkian, Foreign Minister Abbas Araghchi, and Supreme National Security Council Secretary Ali Larijani. The visit occurred as traditional US-Iran channels were failing and Trump was openly threatening military action. Days later, Trump suggested Iran wanted to negotiate, a sign that messages were flowing through Muscat.

This is familiar ground for Oman. The country's policy of "positive neutrality"—a doctrine rooted in non-intervention and dialogue—has produced results before. It was Oman that:

• Hosted secret US-Iran talks in 2013, paving the way for the 2015 nuclear deal.

• Mediated prisoner releases and conveyed critical messages during past crises.

This approach is reinforced by Oman's internal culture of pluralism and its history of navigating relationships with larger, more volatile neighbors.

The Limits of Facilitation

However, Oman's past success highlights the limits of its current approach. Mediation is effective only when both sides are incentivized by restraint. Today, Iran increasingly acts as if escalation is a tolerable, if not useful, strategy.

Tehran continues high-level uranium enrichment, restricts international inspections, and frames its regional policy around expelling the United States and Israel from the Middle East. While this posture serves an ideological purpose, it is strategically fragile. It misjudges the current risk tolerance in Washington and Jerusalem and ignores how exposed the Gulf would be in a wider conflict.

This is where Oman’s role must evolve. Simply passing messages is no longer enough. Muscat is one of the few capitals whose warnings Tehran takes seriously, giving it both unique influence and a heavy responsibility.

A New Mandate: Pressuring Tehran for Concessions

The trust that allows Oman to carry messages from the US must now be used to deliver a tougher one to Iran: its current trajectory is unsustainable. A major regional war would inflict lasting damage on everyone, including Iran itself.

This warning carries more weight coming from a Gulf neighbor focused on regional survival than from Washington or Israel. Even Iranian diplomats have acknowledged this reality. In mid-January, Iran’s ambassador to Saudi Arabia confirmed contacts with Saudi, Qatari, and Omani officials, warning that any conflict would have catastrophic regional effects. Tehran welcomes dialogue when it prevents escalation; it must now be convinced that dialogue also demands concessions.

A path to compromise still exists. Iran could scale back from its highest enrichment levels, restore full access for IAEA inspectors, or signal regional restraint. These moves would build trust without requiring an ideological surrender. In return, the United States can offer meaningful sanctions relief and avoid maximalist demands. These are the kinds of transactional steps Oman has successfully brokered in the past.

But this outcome is unlikely if Muscat remains a passive facilitator. The GCC states that once doubted Oman now depend on it as a firewall. This backing gives Muscat unprecedented political cover to speak bluntly, firmly, and privately in Tehran.

For decades, Oman thrived in the shadows as a discreet messenger. Today, discretion without direction is not enough. The risk is no longer diplomatic awkwardness but war by miscalculation. To remain credible and keep the region intact, Oman must use its influence not just to relay messages, but to shape Iran's choices. Its quiet role has always been valuable; now, it must be consequential.