Grain and soy complex futures gapped higher Sunday night after crude soared above the $100-a-barrel threshold as the Iran conflict intensified, curtailing crude flows out of the Middle East.
Soybean oil, which is closely correlated to distillate markets, particularly diesel or its twin, heating oil, continued to lead the chart in the ag complex, with May contract up 243 points to, or 3.7%, to a contract high, trading at 69.01 cents. That helped lift May soybean futures another 18 cents to $12.18 ¾. May SRW wheat, which jumped over 30 cents on Friday, added another 17 ¾ cents, or 2.9%, to $6.34 ½. May corn gained 7 ¾ cents to $4.68 ¼.
May Brent crude, the global benchmark, surged $15.99,or 17.2%, Sunday night to $108.67 a barrel, for a gain of 45% from its close on Feb. 27, the day before the U.S. and Israel launched a joint attack on Iran. April West Texas Intermediate crude, the U.S. benchmark, was up $18.47, or 20.2%, at $109.37 and has rallied 67% since the start of the conflict.
Rising oil prices are seen boosting demand for soybean oil as a critical blending feedstock for biodiesel. April heating oil jumped another 15.7% on Sunday night to trade at $4.193 a gallon.
While optimism over impending government blending quotas and expanding domestic crush capacity had already fueled a strong year-to-date rally, the escalation in the Middle East has changed the stakes. Analysts and energy ministers are now warning that if the Strait of Hormuz remains closed, crude could test record highs above $140 a barrel for the U.S. benchmark.
May soybean oil rallied 7.7% last week and has gained nearly 36% in the year to date. That’s aided a rally for soybeans, with the May contract rising 30 cents last week to close Friday just above the $12 a bushel threshold at $12.00 ¼, a two-year high. May SRW wheat, meanwhile, rose 25 ¼ cents on the week to hit an eight-month high.
The rally for oil and other energy products has also lifted commodity indexes, sparking fund buying interest across markets,including agricultural futures. The Bloomberg Commodity Spot Index, which tracks a basket of commodities including oil and natural gas, rose 8.1% last week, exceeding its previous peak set in mid-2022 following Russia’s invasion of Ukraine.
Commitments of Traders data released by the Commodity Futures Trading Commission on Friday showed that through March 3, speculative funds had flipped from a net short position to a net long of 52,974 contracts in corn futures and options – a net move of 66,841 contracts, according to Barchart. Speculative traders added 14,700 contracts to their net long in soybeans, taking their net long position to 198,902.