Biofuel Optimism and Oil Volatility Keep Grain Markets Climbing

More confusion and uncertainty around the war with Iran and the closure of the Straits of Hormuz kept the markets volatile with the grain and soy markets rallying, with more of the bean and bean oil rally being supported by increased optimism that the new EPA mandates for RVO and Rins will be announced and approved in the next week. The markets have priced in sharply higher crude prices and the potential for a much-expanded bio-fuel program in 2027 and beyond, which makes the market vulnerable for a selloff if the facts do not match the hype. It is all about crude oil price direction into the end of the week and if the world crude and equity markets create enough pain on the Administration to alter their plans.

News and Notes:

• Weather remains a non-issue for SA with harvest slowly moving along as harvesting the record crop has been slower than normal which has also slowed the safrinha planting. The delay is not expected to present a problem. US weather is turning more spring-like into the 10-14-day outlook. One or two more soaking rain systems across the Corn belt would be welcome before planting seriously starts in early April driven by the first plant insurance dates.
• The November bean daily chart is on Page 2 and shows the underpublicized 1-year rally that has unfolded in the middle of 2 record SA bean crops, a trade war, tariffs, a sagging Chinese economy, and no progress on expanding SAF in the US. While industry conversation still focuses on record world ending stocks, prices have continued to trend higher with significant breaks and rallies to keep the uptrend intact. So far in 2026, beans have rallied right at $1, in a counter-seasonal and unexpected show of strength. The last 35-cents is due to the rally in crude prices, but this chart tells a different story than the popular narrative of too many beans from SA to have a rally.
• Ethanol production was higher this week producing 331 Mga which used an extra 11 MBU from last week. While gas prices are rising and profit margins are strong, demand for corn from the ethanol plants will remain strong.
• The latest from Iran revolves around the potential mining of the Straits by Iran that whiplashed prices of crude oil and then the other markets around as retractions, new statements and other updates came out about the re-opening of the Straits. Although crude oil rallied less then $5 a barrel, the markets still reacted to the uncertainty. Until the Straits are open and safe, the markets will be hour to hour.

There is no getting off the roller in the middle of the ride and the volatile back and forth trade is making many wish they could stop the roller coaster, but it will continue until the Straits are re-opened and probably well after that accomplishment. The nature of the contradictory news stories, rumors, tweets and announcements have made trading (or even wanting to participate) in this market a high-risk proposition. The volatility will end and the markets will return to trying to determine fair value at some point, so use these opportunities, regardless of how scary they may be, to sell some bushels on the rally.