Grain Markets and Other Stuff

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🌧️ Rain Hits the Corn Belt
Rain has returned to the drought-stricken Corn Belt. Over the last 72 hours, a wide band dropped 1–3 inches across parts of Missouri, Illinois, Indiana, and Ohio. Radar remains active this morning, with a strong system stretching from southeast Missouri into southern/eastern Illinois and across Indiana and Ohio.

📉 Grain Futures Slip
Grain markets moved lower Wednesday as attention shifted away from the Middle East conflict. May corn lost nearly 3 cents to around $4.44, May soybeans fell about 1 cent to near $11.70, and Chicago May wheat dropped roughly 6 cents to about $5.68. Ample global supplies, concerns over Chinese soybean demand, and rain forecasts across the winter wheat belt weighed on prices.

⚖️ DOJ Investigates Fertilizer Companies
The US Department of Justice is investigating several major fertilizer producers for potential price collusion. Companies under scrutiny include Nutrien, Mosaic, CF Industries, Koch, and Yara. The probe is in its early stages but has bipartisan support amid concerns over high farm input costs and food prices.

🚢 Strait of Hormuz Traffic Collapses
Shipping through the Strait of Hormuz has nearly halted. Vessel traffic dropped from more than 100 ships late last week to just a handful early this week. The strait is a critical chokepoint for oil, natural gas, and fertilizer feedstocks, and disruptions have pushed commodity prices higher.

✈️ Fuel Buyers Rush to Hedge
Airlines and shipping firms are rushing to hedge fuel costs as crude prices surge. Many are using call options to protect against further spikes, with jet fuel prices in Europe hitting their highest level since 2022.

🌽 Ethanol Production Update
US ethanol production slipped to 1.1 million barrels per day last week, down slightly from the prior week but still above last year. Stocks increased to 26.34 million barrels. Ethanol margins across the Corn Belt remain positive, ranging from roughly 5 to 35 cents.

📦 Flash Corn Sale
USDA reported a flash sale of 125,000 metric tons (about 5 million bushels) of corn to unknown destinations for delivery in the 2025/26 marketing year.

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🌍 Iran Conflict & Fertilizer Markets
The war in Iran has led to a partial pause in fertilizer bidding as production curtailments and Gulf shipping disruptions slow movement. The Middle East accounts for about 25% of global urea exports, and US inventories were already tight. If nitrogen equals 10–20% of a corn grower’s costs, a 40% price spike could raise total production costs by 4–8%, which has sparked talk of aggressive acreage switching away from corn.

🚢 US Insurance Backstop for Gulf Shipping
The US will help insure ships traveling through the Gulf as war-risk premiums surge. President Trump ordered the US International Development Finance Corporation to assist with insurance costs and said the US Navy may escort tankers through the Strait of Hormuz if needed. Officials are also prepared to tap the Strategic Petroleum Reserve if supply disruptions continue.

💵 US Dollar Surges
The Bloomberg Dollar Spot Index has jumped sharply since the conflict began, marking its strongest two-day rally in nearly a year. Rising oil prices are fueling inflation concerns and could delay Fed rate cuts. Unlike past oil shocks, the US is now a major energy exporter, which has helped support the dollar.

🥩 Brazilian Beef Trade at Risk
A prolonged conflict could disrupt Brazilian beef exports through Middle Eastern shipping routes. About 10% of Brazil’s beef exports go directly to the Middle East, while 30–40% pass through the region en route to Asia and China. If flows are disrupted, the US could become an alternative market.

📊 Farmer Sentiment Improves Slightly
The Purdue/CME Ag Economy Barometer rose to 116 in February, up slightly from January as current conditions improved. However, expectations for the future weakened, and 44% of farmers said their operations are worse off than a year ago.

🌽 USDA Flash Corn Sale
USDA reported a flash sale of 196,000 mt (about 8 million bushels) of corn to unknown destinations for delivery in the 2025/26 marketing year.

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The war in Iran poses risks to global fertilizer production and supply chains 🌍. The Gulf region hosts some of the world’s largest fertilizer plants, and roughly one-third of global crop nutrients pass through the Strait of Hormuz. While the US imports little fertilizer directly from Iran, it relies heavily on supplies from other Gulf countries shipping through the strait. Fertilizer prices—especially urea—have already risen amid disruption fears. Natural gas prices also moved higher after Qatar temporarily shut down a major facility Monday, adding pressure since gas is a key input for nitrogen fertilizer. Roughly 25% of global anhydrous ammonia exports and 20-25% of global urea exports move through the Strait of Hormuz. Many US fertilizer retailers pulled their offers yesterday due to the uncertainty.

The conflict is also influencing ag markets 🌽🫘. Soybean oil gained as much as 3.9% Monday as higher crude prices boosted biofuel demand. Soybean futures moved lower amid uncertainty regarding Chinese purchases and whether President Trump’s planned meeting with Xi Jinping later this month will occur as scheduled. Corn futures declined on concerns that disruptions to Brazilian shipments to Iran could reduce demand. Wheat futures were also lower as traders gave back last week’s gains while watching whether global grain shipments could be affected.

The conflict is beginning to impact gasoline prices ⛽. WTI crude surged 8.4% Monday to $72.74 per barrel after President Trump suggested the conflict could last longer than a few weeks. According to GasBuddy, the national average gasoline price rose 5 cents Sunday to $2.99 per gallon. The Strait of Hormuz is effectively closed, with tankers avoiding the region as insurers cancel vessel coverage. Shipping rates for oil and gas have surged, and continued disruptions could contribute to broader inflation pressures.

Brazil soybean production estimates were trimmed 🌱. AgRural lowered its forecast to 178mmt from 181mmt and reported harvest progress at 39% as of last week, well behind last year’s 50%. StoneX also cut its estimate to 177.8mmt from 181.6mmt. Both revisions were tied to drought conditions in Rio Grande do Sul. 

US ethanol production reached a new all-time high last year ⛽🌽. Output climbed to 16.5 billion gallons in 2025, up 1.7% from the prior year, supported by strong domestic demand and record exports. The national average blend rate hit 10.5%, while domestic consumption increased to 14.3 billion gallons. According to the Renewable Fuels Association, growth reflects expanded E15 sales and could increase further if Congress approves year-round nationwide E15. US ethanol exports jumped 13% year over year to 2.2 billion gallons.

US corn shipments exceeded expectations for the fourth straight week 🚢. USDA reported 1.9mmt (73m bu) of corn inspected for export during the week ending February 26—down 8% from the prior week but up 37% year over year. Soybean shipments totaled 1.1mmt (42m bu), up 67% vs. the previous week and 62% above last year. China accounted for about 65% of inspections. Wheat shipments totaled 344,272mt (13m bu), down 39% week over week and 12% below last year. Roughly 12 cargoes of US soybeans were shipped to China last week—2 from the PNW and 10 from the Gulf—totaling about 30m bushels.

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🌍 Geopolitics & Middle East Developments
Iran’s Supreme Leader, Ayatollah Ali Khamenei, was killed over the weekend following a US-Israeli strike on Saturday that also eliminated several senior Iranian officials. Authorities reported that the attacks killed and wounded hundreds of civilians. The strike came after US-Iran negotiations aimed at addressing Iran’s nuclear program ultimately failed. In retaliation, Iran launched attacks against US and Israeli bases across the Middle East and vowed to continue further strikes. 

🛢️ Oil Markets & Strait of Hormuz Closure
Oil prices surged Sunday following the US and Israeli strikes. WTI crude oil futures opened more than $8 per barrel higher and were trading about $4.60 per barrel, or roughly 7%, higher early this morning. The rally is being driven primarily by the closure of the Strait of Hormuz. Following Saturday’s attacks, Iran announced the waterway would be closed to navigation, halting the flow of oil shipments. Roughly 20% of global oil supplies typically move through the strait. 

🇨🇳 China, Energy Security & Trump–Xi Summit
The strike could complicate President Trump’s upcoming visit to China. Beijing publicly condemned the attack and warned it could further destabilize the Middle East. Despite its strong rhetoric, China is not expected to intervene militarily. The Trump–Xi summit scheduled for later this month is still expected to proceed, though major breakthroughs appear unlikely. China imports about 14% of its crude oil needs from Iran and accounts for roughly 80–90% of Iran’s oil exports, as sanctions limit purchases from other countries.

🌾 Grain Markets React to Geopolitical Risk
Wheat futures surged on Friday. The Chicago May 2026 contract rose 17 cents to close near $5.92 per bushel, its highest level since July 2025. The rally was fueled by heightened US-Iran tensions that triggered short covering by the funds. Corn and soybean futures also moved higher, with May corn gaining about 5 cents to settle near $4.49 per bushel and May soybeans rising roughly 7 cents to close near $11.71 per bushel. Traders were clearly anticipating a potential weekend escalation on Friday. Grains showed some early strength overnight but were mostly steady early this morning.

📊 Fund Positioning – CFTC Commitment of Traders
The CFTC released its weekly Commitment of Traders report on Friday. For the week ending February 24, large money managers were net buyers of 29,000 corn contracts and net buyers of 12,000 soybean contracts. Funds were also net buyers of 52,000 SRW wheat contracts during the week. The net short position in SRW wheat shrank to 18,000 contracts, the smallest since October 2022. Private estimates suggested funds held a net long of about 25,000 wheat contracts at Friday’s close, along with a net long of roughly 180,000 soybean contracts and a reduced SRW wheat net short of about 10,000 contracts. 

🌽 Crop Insurance Prices & Acreage Outlook
This year’s crop insurance pricing provides improved coverage for soybeans, while corn faces greater downside risk. The spring projected soybean price is $11.09 per bushel, up 55 cents from last year. The corn projected price declined 8 cents to $4.62 per bushel. Spring wheat’s projected price stands at $6.19 per bushel, also 55 cents higher year over year.

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