This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
War headlines continue to be the main driver of grain and oilseed market direction. There was a war of words over the weekend in addition to the actual conflict. Trump tweeted more threats to Iran, saying he was going to knock out their power plants if they did not allow free navigation through the Strait of Hormuz. Iran responded it would knock out power and water infrastructure for any U.S. allies in the Middle East. Sunday night opened with a lot of fireworks. Crude and other energy futures were up strong and pulled the grains and oilseeds with them. Stock futures were down hard as the market worked to price in the escalation of the conflict.
Early Monday morning, though, Trump tweeted that after very good talks with Iran over the weekend, the sides were very close to a deal, and he was suspending any planned attacks on Iranian power plants and other infrastructure for five days pending the outcome of continued talks. The markets immediately priced in a big de-escalation of hostilities. The speaker of the Iranian parliament tweeted that there were no direct or indirect talks with the U.S. over the weekend and that Trump had backed down because of threats made by the Iranian side, calling the talks “fake news” aimed at manipulating markets. Energies still dropped and stocks soared, with the Dow Jones Industrial Average trading more than 1,000 points higher at times during the day session. Agricultural commodities also fell from their highs. Trump, in later comments to the media, took it further, saying he would not be surprised to see the entire conflict end quickly, maybe in less than five days. He would not answer questions about who, specifically, on the Iranian side was involved, only saying they were representatives of the Iranian government.
So, what is the truth? Were there talks or not? Are we close to a deal or about to see hostilities escalate again? We have no idea — call it the fog of war. Both sides are using media announcements to further their own agendas. The Iranian side has been hit militarily but is still affecting global markets and needs to maintain internal stability. Trump is facing domestic pressure to show progress, and much of his legacy may be tied to the outcome of this conflict. He cannot withdraw if it allows the regime to continue to pose a threat. Some reports said Trump’s comments may have been designed to cover troop movements ahead of a larger offensive. So, we do not know the truth in the war of words, but the market quickly priced in a de-escalation. All we can do is watch how things unfold.
This is yet another reminder of the importance of having orders working. If you had orders on December corn at the old highs of $4.98, you may have gotten filled on Monday. If you were waiting to act when it got there, you likely missed the opportunity.
With all these headlines, it is easy to forget that one week from today we get one of the major USDA reports of the year. While it may not be a major market mover due to current uncertainty, it still needs to be released and digested. The Prospective Plantings and Quarterly Stocks report will be released next Tuesday, March 31, at noon. Acreage estimates may already be outdated, but the market will also watch quarterly stocks closely. The ag markets are also expecting the EPA’s final Renewable Volume Obligation requirements for biofuels in 2026 and 2027 at Friday’s “Celebration of Ag” event at the White House. A trade deal with China appears likely to be delayed until the conflict with Iran is resolved.