Check our advice monitor at ProFarmer.com for updates to our marketing plan.
As we’ve noted at Evening Report, diesel prices have led the way higher in the global energy complex due to squeeze on Asian refineries resulting from the virtual closure of the Strait of Hormuz. Reuters on Wednesday reported that traders and analysts are growing fearful that surging diesel prices will threaten to slow global economic activity. Energy economist Philip Verleger has estimated disruptions have resulted in a supply loss of around 3 to 4 million barrels of diesel a day, or around 5% to 12% of total global consumption, the report said.
- “Diesel is the most exposed product to this conflict structurally,” Shohruh Zukhritdinov, founder of Dubai-based Nitrol Trading, told Reuters. “Diesel underpins freight, agriculture, mining and industrial activity, making it the most macro-sensitive barrel in the system.”
Heating-oil futures, a proxy for diesel, have surged over 44% so far in March. The national average price for diesel rose to $4.83 a gallon Wednesday, according to AAA, up from $4.038 a week ago and a 31.7% jump from $3.667 a gallon a month ago.
Cold Comfort Dept.: The fertilizer supply shock resulting from the closure of the Strait of Hormuz is tightening the input squeeze on farmers and likely forcing a shift away from planted corn acres this spring. But it could be worse. The United States has “the most sophisticated nitrogen market in the world,” Bloomberg Intelligence’s Alexis Maxwell said in a webinar Tuesday, according to Agri-Pulse. Domestic producers are capable of meeting between 75% and 90% of its urea, ammonia and urea ammonium nitrate needs, she said.
Brazilian producers, meanwhile, may struggle to compete for fertilizer supplies in the global market due to limited access to affordable credit, while the European Union is more dependent on imports, particularly from Egypt and other Middle Eastern countries where natural-gas supplies are threatened, she said. U.S. UAN producers on the Gulf Coast can also pivot to urea production if high prices persist, Maxwell said, which would help bolster domestic supplies.
CPI steady ahead of Iran jolt: Consumer inflation held steady in February, but investors looked through the data in anticipation of a March reading likely to reflect a surge in fuel prices as a result of the war with Iran. The consumer price index showed retail prices rose 2.4% from a year earlier in February, matching the pace seen in January and in line with the average estimate produced by a Wall Street Journal survey of analysts. Core CPI, which strips out volatile food and energy costs, rose 2.5%, also in line with expectations.
“For policymakers, the real focus is core PCE, which is still running closer to 3% and could firm in the months ahead,” said Olu Sonola, head of U.S. economics at Fitch Ratings. “If the conflict in Iran pushes energy prices higher and that spills over into core inflation, then inflation will remain a live risk. That leaves the Fed with little choice but to wait a few more months to determine which side of its dual mandate poses the greater risk.”
- Beef prices continue rise: The CPI report showed no letup in the rise in beef prices. Beef and veal prices were up 14.4% in February from a year earlier, according to the Bureau of Labor Statistics, while uncooked ground beef was up 15.2%. Rising beef prices have previously drawn the ire of the White House. President Donald Trump, in his State of the Union address last month, said beef prices were starting to come down significantly.
Administration preps new tariff probes: The Trump administration is preparing to announce new investigations that could lead to higher tariffs on several nations over what the U.S. deems unfair trade practices, the Wall Street Journal reported, citing people familiar with the plans. The probes will be initiated under Section 301 of the Trade Act of 1974, which allows the president to levy tariffs against nations that discriminate against U.S firms or commerce.
The Section 301 tariffs are designed to replace the temporary global duties of 10% that Trump put in place after the Supreme Court last month ruled many of his second-term levies illegal. The investigations are expected to focus on fighting what the U.S. calls excess industrial capacity from export-reliant nations such as China, the report said, while some probes could target nations or blocs such as the European Union.
Not sweating it: The Trump administration believes it can tolerate a brief spike in oil prices, lasting up to four weeks, before taking a political hit that does lasting damage, Politico reported Wednesday, citing a person close to the White House. The report said administration officials were encouraged Tuesday when oil dropped to $80 per barrel, down from nearly $120 a barrel early this week, reinforcing their view that the spikes are temporary and manageable.
‘Strange’ seed alert: The Colorado Department of Agriculture this week warned residents they could receive “strange” seed packages ahead of planting season, the Denver Post reported – a strange phenomenon that’s been reported in other states. The report said the agency isn’t aware of anyone in Colorado receiving unsolicited seeds in the mail. Authorities in Texas and Alabama have reported such packages.
- Residents should not plant any seed packages they receive unsolicited through the mail because they could be a potential biohazard, the agriculture agency warned.
Coloradans have received unsolicited packages of seeds since 2020, which the Department of Agriculture said at the time appeared to come from China and other countries. More than 1,000 people have received unsolicited seeds since then, including at least two last year, Wondirad Gebru, director of the department’s plant industry division, told the Post. USDA and U.S. Customs and Border Protection investigated the packages. “They did not find concrete (evidence) of bioterrorism, but there could always be the potential,” Gebru said. “These are not vetted (seeds).”
Don’t miss these Wednesday must-reads: