War Premium Builds as Speculators Flood Commodity Markets

With ongoing missile attacks on both Iran, US, Israeli, and regional sites, the week ended with higher grain and crude trade while beans took a breather to trade lower in a volatile two-sided day. The world trade is waiting impatiently on any news on re-opening the Straits of Hormuz or a diplomatic solution that leads to a cease fire, and hopefully both. Weekly gains for all markets slowed considerably from the first week of the war, but the dominant theme is speculative fund investors taking on a larger share of the ownership as farmers continue to make sales in this unexpected late winter rally. The direction of the markets depends entirely on news or progress in ending the war and re-opening the Straits. Remember prices go up on an escalator and down in an elevator, so do not underestimate how fast the markets can reverse recent course with one tweet.

News and Notes:

- Brazil’s weather for Mato Grosso for the last 25% of their bean harvest and remaining 60% of their corn planting looks great for the next 10-14-days. Finishing weather for S Brazil and N Argentina is also non-threatening for their late finishing crops and ongoing early harvest. The only wildcard left for SA weather is how will Brazil’s safrinha crop go through pollination in 6-8-weeks.

- The daily Dec corn, Nov bean, July wheat, and April crude oil charts are on Page 2 and show the consistent rallies since the war started. The funds have piled into length in all of these markets and many other raw material markets. The charts are bullish but are overbought. Overbough conditions can remain for extended periods of time, but the longer they remain the uglier the break when it happens. The funds are long wheat for the first time in nearly 6-years, which emphasizes how much money is pouring into our markets.

- Fear, panic, and speculative fund money are controlling the markets since the war started. With “experts” saying crude oil prices could go to $125 to $150, the fear of skyrocketing inflation has become a common theme for most raw material markets. As farmer sales have been recommended and executed and speculative fund buying has increased their net long positions, the interesting transition from farmer ownership to speculative ownership is a concern. While a recent theme has been to buy hard assets, if the funds are the major owners and not the producer or end user, the chances of a speculative bubble grow considerably. At some point the Straits will re-open, where the chances of a nasty correction are growing. Be very careful if you are postponing sales because the recent rallies have believing even higher prices are on the way.

- The crude oil and energy markets have been the biggest areas of focus since the war began. Market spreads, both inside the same commodity using different months and in between commodity markets, are actively traded and those prices are often good indicators of how the trade is positioning for the next several months or years. Looking at the crude oil spreads, the front months have been getting a majority of the volume and buying, but the further out months in 2026 show the expectation of a return to normal prices of $75 to $78 a barrel by early fall. Grain and soy spreads are all moving in tandem as part of the inflation trade and hope for more increased bio-fuel capacity in the new EPA guidelines.

- Weekly Changes: Corn + 6 3/4 (May ‘26), + 7 (Dec ‘26), Beans + 24 1/2 (May ‘26), +14 3/4 (Nov ‘26), Wheat – 3/4 (July ’26), Crude +781, Diesel +3923, Dow -931, US Dollar +1398, Cattle -368, Feeder Cattle -615, Hogs -218, Cotton +147, Milk -19 (16.18).

Volatile markets create a different type of anxiety for every producer as the fear of missing out on higher prices battles with the fear of the gains disappearing as quickly as the developed. Controlling your emotions and staying disciplined is the real battle in farming. You can’t control the weather, you can’t control input prices, you can’t control government policy. That is just the short-list of non-controllables. Controlling your emotions is the challenge and a necessary part of a good marketing plan. Reward this rally, put in your sales orders with your buyers to deal with the overnight volatility, and stay calm. As of noon, on Sunday, there has been no news regarding a cease fire or significant progress toward re-opening the Straits which means market should open steady with a higher lean. Have a great Sunday.