Markets Pause Ahead of USDA Report as $100+ Oil and Iran Headlines Collide

The holiday shortened week started with a news filled day of trade as President Trump announced significant progress in re-opening he Straits while traders took some profit in corn and beans ahead of Tuesday’s USDA prospective planting report. The markets remain active and volatile, but the main driver remains Iran and when the Stratis can re-open to help reset world fertilizer prices and stop crude’s sharp rally. Markets will be closed on Friday for Good Friday and the Easter weekend, which makes this week’s accomplishments or lack thereof, even more important ahead of the break.

News and Notes:

- US spring planting weather looks favorable for the first week of April with no major delays to as planting moves north. The S Plains and a few areas in the central Midwest need rain to catch up from a very dry winter, but planting will start on time for all sections of the Corn Belt. SA weather remains non-threatening with bean harvest pushing 85% complete with safrinha corn planting nearly complete.

- The table for Tuesday’s USDA planting intentions and quarterly stocks is on Page 2 with the industry estimates for the report. Major changes are not expected in the stock’s numbers, but the planted acreage numbers are where the focus will be. There will be some farmer survey data included in the USDA’s estimates, but the surveys were taken before the sharp rally in world nitrogen prices. The acreage numbers normally closely follow the numbers released in February at their Ag Outlook Forum, but private estimates have been narrowing the corn range down to 94-96 MA with beans in the 84-86 MA range. The report will be released at 11 am central on Tuesday and will impact the market, but developments in Iran and spring planting weather will be much larger stories after the release.

- Crude oil prices continue to price in an extended closure of the Straits with spot crude futures up nearly $20 a barrel since last week’s and closed today at their highest level since early summer of 2022. Today was the first day where corn and beans separated themselves from rallying crude oil, but that volume was light and more indicative of pre-report positioning by the funds who are holding large, long positions in both corn and beans.

- The world equity markets are nervously trading each day, the closure continues because the chances of significantly higher crude oil prices would certainly tip the world economy into a very fragile position, and potentially an extended recession.

- Fertilizer prices continue to work higher with producers and retailers scrambling to get supply. For any operation that got their supplies on in the fall or already delivered, they are reaping eh benefits of their good fortune as corn and bean prices rally. The full extent of the fertilizer shortage may not be known until harvest, but the chase of more record yields will be challenged in the new environment.

- A solid corn sale was reported this morning to unknown destinations, which is normally China. US corn sales remain strong and any under the radar purchases by China leading up to the trade meeting in Beijing in May would be a great signal of progress and goodwill.

The corn rally was due for some sort of pause and tomorrow’s acreage number gave it the chance. If the private estimates pushing planted corn acres out to 96 MA plus are correct, $5 Dec corn futures will be difficult to maintain without a pollination weather fear. The next 2-months of weather will be a larger determinant than farmer intentions, but the struggle of deciding to plant corn in a rising and short fertilizer environment is not a decision most farmers want to make after declining on-farm revenue over the last two years. I will put out a recap of the USDA acreage report tomorrow and update any new developments in Iran.