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The Perfect Storm: Iran, Israel, and the EPA's Surprise Move
Markets experienced dramatic overnight shifts as Middle East conflict sent crude oil soaring 13% while the EPA announced record biofuel mandates, creating a perfect storm of volatility.
• Crude oil surged 13% overnight - equivalent to a $1.40-$1.50 move in soybeans
• EPA announced highest-ever renewable fuel obligations through 2027
• Soybean oil closed limit up (300 ticks) in response to favorable biofuel mandates
• Iran-Israel conflict raises concerns about the Strait of Hormuz, where 20% of daily global oil flows
• Grain markets closed on their highs despite favorable weather forecasts
• Cattle markets sold off sharply, closing on their lows
• US-China trade negotiations showing positive progress following recent talks
• Northern Plains experiencing cool conditions with heavy rainfall in parts of South Dakota
• Markets face significant weekend risk with ongoing geopolitical tensions
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Thank you, Tommy G
Happy Friday everyone. Tom Grossoffi, agbow Media, sitting down here in Nashville at the Nesvik trading office and boy do we have a lot to talk to you about. I didn't leave here until 1.30 in the morning and I came back at 6. The world changed. I sent a text out to clients yesterday saying there's nothing going on. I wish I had some news. There's just nothing going on. Well, it all changed and I got just a guy to talk about it. He brought in his NDSU sweatshirt. That means he means business, because you don't mess with the horns. Speaking of horns, bring them in Don Wick, red River Farm Network. Mr Wick, you have the NDSU sweatshirt. That means you don't mess with the horns. Speaking of horns, crude oil up 13% last night. Stage is yours. What do you know?
Speaker 2:Obviously the war had some, or the bombing taking place in the Middle East had a lot of impact on that. We came in this morning and saw crude taking big advances, gold going to new highs, with that really being that safe haven. It is a crazy time. I went home yesterday thinking the senator in handcuffs was going to be the big news story of the day and obviously you started sending me texts last night about what was happening overseas.
Speaker 1:Yeah, that's one for the books. I didn't even know it had happened. You know me, I always have my phone or Squawk Box or something. I didn't know I was actually working here. We have a new studio here in Nashville Ag Bowl Media, ag Bowl Trading Building. I had no clue.
Speaker 1:A client texted me and said with crude oil up so much, don't you think corn should go up? And I'm thinking how much is crude oil up? Show us what we have. And when I logged in, crude oil was up five bucks. So absolute dynamic. Now that was nothing, because an hour and a half later I started texting you and clients and I send out my group texts and stuff. Crude oil up $9, 13 percent. That'd be equivalent to like a dollar, 40 dollar, 50 move in soybeans. This is a significant move and let me tell you, the amount of money involved in physical energies and energy futures dwarfs what we're doing here. In corn and beans, I mean the energy. The world energy markets moved 13 last night. Now, now, ed, I heard rumor, has it? We had some news out of the EPA today. What do you know about that, mr?
Speaker 2:Whitton Mid-morning the announcement from the Environmental Protection Agency regarding the renewable fuel obligations, renewable fuel volumes, that came out and I think the trade you tell me, but I thought the trade was thinking it was going to be lower than the Aggies and the biofuel industry had been hoping for and it actually came out better than anticipated. We're looking at a 15 billion gallon total for 26 and 27 on the ethanol blends. The biodiesel quota it's like 3.3 billion this year goes to 5.6 billion gallons for 26 and almost 5.9 for 27. Again, highest ever as far as the volume requirement that we've ever seen in that announcement this morning Certainly had a huge impact on the soy oil in our trade here today as well.
Speaker 1:Yeah, soy oil just closed. Limit up 506.1 up 300, 300 ticks on soybean oil. Limit up 506.1 up 300, 300 ticks on soybean oil. Limit up yes, uh, every few weeks you'd see soybean oil up, 150 ticks down, 150 ticks up down. I looked over. Soybean oil was off to the races. And then soybeans had a magnificent day. Soybeans up 25, 26 cents, going home. Uh, over the weekend grains closed on the high. Soybeans on the high corn on the high, all three classes wheat on the soybeans up 25, 26 cents going home. Over the weekend, grains closed on the high. Soybeans on the high corn on the high, all three classes of wheat on the high. Energies are moving Right as we start to film here. Today we had some breaking news here. Bombs are flying, iran now sending in bombs and missiles to Israel. Was it you? I don't know who said it. Someone said that's what we need. Another war, right, that's just what. Who had another war on their bingo card? Not me, mr Wick.
Speaker 2:Think about the shipping issues that Strait of Hormuz. 20% of the oil daily goes through that particular shipping channel, so that has to have an impact on the petroleum. We knew what happened in the Black Sea region when we started with the Russian-Ukraine conflict, so a lot of this is just trying to get from point A to point B.
Speaker 1:Yeah, let's talk about fertilizer. Iran, third, fourth largest producer of a certain type of fertilizer. Keep an eye on that. You know, josh, is it? Josh Linville from FC Stone does a wonderful job keeping track of fertilizers. Go back and look at his tweet and he had some great coverage on that. This is a big deal. This isn't like crude was up $2. They're fighting. Then it went back down. We have the stock market down a bunch, which is somewhat normal for what's going on lately. But then it's a friday friday the 13th, I might add and these guys are going to fight friday, saturday, sunday these markets, wherever they close, they're not going to look the same. Speaking of not closing, well, did you see where the cattle market closed, mr wick?
Speaker 2:well you know that market. We've been looking at what's been going on with demand there. It's been amazing how it's held together. When we're paying that much more at the gas pump, that's going to probably impact what we're going to see at the supermarket as well.
Speaker 1:Yeah, and if you're out there in financial land and you were hoping the interest rates were going to get lowered, I don't know about that. When crude oil, the energies of the world go up 12, 13, that is extremely inflationary. And as far as cattle, those tires were full. They let a little air out of them. Live cattle, feeder cattle closed on the dead low and then we're open for five more minutes. We close at one o'clock. We officially close at 105, offered through the lows into the bell. It's been a long time since I've seen a cattle market organized and sell off like that. We sell off and we have these vicious rallies. This one's real. We closed on the low, put them down for the week. We'll see where we open monday, but there is a lot of risk over the weekend. Anything else, you can tell us how the dc or overall uh little tidbits you have, mr wick take a look at.
Speaker 2:Early in the week we had uh, the US and China trade negotiators were meeting in London. It was just a week ago, thursday, that President Trump and President Xi had a phone call and that put together a very quick meeting as far as two-day negotiations and it looks like we're back again to where they had negotiated things in mid-May. So a positive trend. As far as the tariff situation between the US and China, a lot of different things changing as far as allowing the Chinese students and all these kind of things. There's a lot of discussion in those negotiations. Rare metals obviously the big story out of that one, the US certainly needing those coming out of China.
Speaker 1:Yeah, so let's wrap it up. This will not be the longest show you and I have ever done. I forgot about the China-US meeting because that was so long ago. We got China-US getting better. Look for other groups to come and negotiate. Probably one of the struggles we have is with the European Union. When you say European Union, that's not just one country, that's a lot of countries. All have to get organized to say, yeah, we're gonna let uh them have a tariff on this or that, so uh, look for it there. The grain markets if we would have recorded this show yesterday, my voice would have been a lot lower, I would have been depressed and I don't know what. To tell you, folks, we have a market. Beans were up 25. Soybean oil was limit up. Corn went bid. This was into a really favorable weather report coming in the weekend. How's the weather up in the Northern Plains, mr Wick? It's feeling a little cool out there today.
Speaker 2:It's surprising to me that the GDU units are pretty much on track with where they should be at this point. But I got to remember that in May we were up in those 90s and that hot, hot weather. So we've averaged out, we're right on trend as far as GDU units. But it's pretty cool out there and rain. You get south of the valley like Sisseton. South Dakota had seven inches, aberdeen had close to eight inches of rain, uh early this morning. So a lot of folks underwater right now.
Speaker 1:I did not know that sometime between when I went to bed at two in the morning, woke up at six, I didn't catch that weather report, but you did. Speaking of catching everything, how do people get a hold of you? You put out one of the best. Uh, what do you? How would you call your Monday letter?
Speaker 2:uh, it's an e-newsletter called farm net news. It's a good snapshot of what's going on in the world of agriculture at FarmNews. It's our recap of what's been happening. You go to our website, rrfncom, and sign up. We'd love to have you, mr.
Speaker 1:Don Wick, owner and big boss of the Red River Farm Network. I can actually call him a friend. I don't know if he'll do the same, but we'll see network what I can actually call him a friend. I don't know if he'll do the same, but we'll see. Hey, catch shows like this. You can watch us on acres tv. If you're listening on apple and spotify and all those things, great. If you're our friends over at acres tv, welcome aboard. And, as always, I'm tom grisafi, agbo media, agbo trading. I'm an ap associate person, a nesvik trading. This is the week in review for 6, 13, 20, 25. Jo, roll the tape. See you, don.
