War Premiums and Raw-Material Shockwaves

General raw material and commodity strength highlighted Friday’s trade as diplomatic negotiations with Iran over their nuclear intentions ended which led to a US and Israeli airstrike on Iran Friday night. Wheat was higher and pulled corn along on fear of heavily delayed N African wheat shipments while beans and bean oil found support on higher crude oil prices. The length of military action in Iran will dictate market price movement in early March, but if wheat and crude continue to rally, corn and beans will be supported.

News and Notes: 

- Argentina and Brazil remain in very good position for normal rain and temperatures into mid-March to keep Brazil’s bean harvest and winter corn planting moving along while Argentina’s later maturing crops will end on a good note. Record yields estimates continue to be released by private analysts. A soaking weekend of US rain for the central Midwest will track across the driest areas of Illinois and Indiana to help recharge soils ahead of early planting.

- The Dec corn daily and May corn weekly charts showed impressive improvement in February with Dec corn closing at its highest level in 3 ½ months and erasing all of the January USDA report losses. The weekly old crop corn chart pushed above all major technical moving averages and looks great heading into the early spring. The daily July wheat chart shows the most impressive performance for February with a 70-cent rally for new 7 ½ month highs. The daily crude oil chart is included to highlight the world energy markets sensitivity to war in the Middle East as prices jumped to new 8-month highs on the heels of a $10 a barrel rally so far in 2026. Raw material and commodity inflation will be supportive for grain and soy prices   

- Cattle had a tough week with the trade trying to decide the effects of a possible strike at the Colorado JBS plant and general concern that the record rally has grown tired which led to technical momentum selling. The market still has a bullish setup but increased daily price volatility should be expected. There are still budget-friendly option strategies to protect your downside risk.

- China is politically posturing about the lack of structure for the early April meeting in Beijing which added volatility to the bean market last week. With the strike against Iran, new details or even a postponement of the meeting should be announced next week. Expect China to continue to leverage their advantages in the trade negotiations.

-February begins the revenue-based insurance price discovery and after one week, the average price for December corn is $4.62 with November beans at $11.09. The corn average price was 9-cents below last year while beans were 55-cents higher. With the revenue-based crop insurance changes and the impressive bean price, bean planted acres may jump more than 5 MA expectations.

- Weekly Changes: Corn +11 1/4 (March ‘26), +5 (Dec ‘26), Beans +17 1/2 (May ‘26), +13 1/4 (Nov ‘26), Wheat +11 1/4 (July ’26), Crude +54, Diesel +1179, Dow -674, US Dollar -165, Cattle -988, Feeder Cattle -1260, Hogs +205, Cotton +55, Milk +126 (16.25).

- With the crop insurance prices set and the sizable rallies so far in 2026, please call us if you are looking for option strategies for re-ownership or setting floors.

Last week’s war trade where the precious metals, crude, diesel and wheat were higher to sharply higher proved accurate as the US and Israel unleashed Operation Epic Fury on Friday night as heavy bombing of Iran commenced after a week of diplomatic warnings. Last week’s wheat rally was part of the concern for a long-term conflict as shipping through the Straits of Hormuz will be limited or potentially stopped. The wheat rally continues to support corn while beans will be higher on bean oil strength from the crude oil rally. The markets have taken on a more bullish posture than expected at the start of 2026. Opening calls are higher with wheat and crude continuing to add Middle East war premium which will spill over to corn and beans. Have a great Sunday.