Inflation Fears Fuel Commodity Rally as Energy Prices Surge

The grains and soy complex moved higher today as worse than expected inflation numbers for February brought in more speculative investment in the raw material markets, including oil. Oil and gas were higher again today as no news or progress about re-opening the Straits of Hormuz was released, which also added buying interest for the general commodity sector. The US is at an impasse with our allies on getting military help to allow safe passage through the Straits, which compounds the short and potentially long-term effects of a lengthy shutdown on fuel and fertilizer prices and when the US and China will finally meet to talk about trade. The market will continue to be driven by crude prices, but the growing fear of inflation will bring in buyers that were not expected participants a month ago.

News and Notes:

- There was no major weather forecast changes in today’s updates with both Argentina and Brazil in non-threatening patterns into month end while the US will quickly warm up from this week’s frigid blast. The US S Plains and large parts of central and northern Illinois and Indiana will need rain in April as increasing drought conditions need to be alleviated for trend or above yields this year.

- The daily April diesel chart is on Page 2 and shows that since the bombing started, prices have traded inside that Sunday/Monday range with today’s prices moving higher for the highest daily close in 4-years. All raw material prices are benefiting from the inflation concern due to the rise in energy prices, so it becomes a self-fulfilling prophecy that keeps pulling each market higher. Energy prices will not top until the Straits re-open, but they have traded stubbornly higher despite President Trump dropping tariffs and restrictions on Russian oil, implementing the Jones Act and releasing millions of barrels from the US Strategic Reserve. Diesel prices have doubled so far in 2026, which will have negative effects across every sector and business if prices do not come down within the next few weeks.

- Cattle traded quietly in a two-sided trade today as the market rests from significant early week rallies and tries to process the potential strike at the JBS plant in Colorado and the loss of pasture and cattle in the Nebraska wildfires.

- Today’s economic news was bearish to markets with inflation readings for February much higher than expected which added to the fear that long-term higher gas prices could sent the world into a severe economic slowdown. A slow world economy and inflation are the worst-case scenario for the US economy. The Federal Reserve did not change rates at the end of today’s meeting, but their post-meeting comments weighed on an already fragile equity market to force losses to 2% across the board. Today’s losses pushed prices to new 3 ½ month lows, with the Dow now down almost 2% for 2026.

- Please listen to last week’s Helena FieldLinkpodcast special on what I see as the impact of the war with Iran is having on our markets.

President Trump’s efforts to help ease the rally in energy prices have not produced results which is effecting every market sector. The word inflation causes concern for every consumer, and it has to be worrying everyone in Washington as we get closer to the mid-term elections. President Trump has taken signals from the stock markets during the tariff tantrums last year, so it will be interesting how much more negative publicity and outcome this administration is willing to take as the Iran war drags on. Farmers want low diesel and low fertilizer prices while corn and bean prices are high enough to make some money. Being able to have all three of those things at the same time will not happen when the Straits finally re-open.