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Is the Iran conflict nearing its end? President Donald Trump said after the grain market close Monday that it’s nearly “complete,” and energy and equity markets reacted accordingly.
April West Texas Intermediate crude futures were down more than 5% from Monday’s close in electronic trade while major stock market averages turned higher after CBS reporter Weijia Jiang posted on X that Trump, in a phone interview, said the war could be over soon.
“I think the war is very complete, pretty much,” Trump told CBS. “They have no navy, no communications, they’ve got no Air Force.”
April WTI was trading near $85.27 a barrel after hitting nearly $120 Sunday night after a weekend of escalating attacks.
Market participants will pay close attention to details, with Trump scheduled to hold a news conference at 5:30 p.m. ET.
“We do not know yet what winning looks like, what the wind-down mechanism is for this war,” Helima Croft, head of commodities strategy at RBC Capital Markets, told CNBC. “But I think a lot of people in the market never thought we’d get this far because they thought he doesn’t want higher prices for the midterm. So I think they are waiting and ready to jump on any sign this is ending. The question is, when is this ending?”
Brazil corn estimate lowered: Pro Farmer crop consultant Michael Cordonnier on Monday lowered his Brazil corn estimate by 2 million tons to 133 mt with a neutral to lower bias. Brazil’s safrinha, or second crop, corn was 82% planted as of late last week, according to AgRural, leaving 18%, or roughly 3 million hectares (7.4 million acres). The planting window is “essentially closed,” Cordonnier said, leaving affected producers to decide whether to press ahead and risk low yields or switch to another crop, such as grain sorghum. He estimates 1 million to 2 million hectares (2.4 to 4.9 million acres) may go unplanted.
- Soybean estimate unchanged: Cordonnier left his estimate for soybeans at 178 mt, with a neutral to lower bias. Rainfall last week favored northern and eastern areas, while the weekend saw southern Brazil receive some rain, with more forecast this week.
Making sense of the dollar: The epic rally that saw WTI surge over 30% last week was accompanied by strong gains for the U.S. dollar. The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, rallied as much as 2.1%last week from its Feb. 27 close. And the stronger greenback was no barrier to grain markets hitting new highs, either.
That’s in defiance of the usual market shorthand that associates a strong dollar with weakness in commodities. The usual idea is that, all things being equal, a stronger dollar makes commodities priced in the unit more expensive to users of other currencies.
Of course, things aren’t always equal. Steve Barrow, head of research at Standard Bank, observed currencies, in fact, “are random” – as shown by the lack of a consistent response by the forex market to events.
“Wars can make the dollar stronger, but sometimes it falls,” he wrote. “The correlation between the dollar and oil is also inconsistent.”
So what’s the best way to think about what comes next? Barrow said investors need to go back to March 2003 and the war in Iraq: Barrow says:
- Like now, this started with a huge US blitz. It finished (or at least major military operations ended) around three weeks’ later with the US claiming a huge success. But if you think the war coincided with a big rally in the dollar, you would be wrong. Euro/dollar was just above 1.05 when the US launched its attack on March 20th, 2003: just three months later it was close to 1.20, never having fallen below the 1.05 level. The war was a disaster for the dollar. Why was that? Arguably because oil prices fell; they did not rise as we might have expected. Prices fell because the rapid success of the US’s military operation undermined Iraq’s ability to significantly damage oil facilities. Markets had been concerned before the conflict that energy prices could increase because of oil field destruction but, when that never happened, oil prices collapsed, as did the dollar. Other wars, that have not involved the US directly, such as Russia’s invasion of Ukraine in February 2022, did result in a sharp rise in the dollar, seemingly because energy prices surged.
The takeaway from those two examples – and others – is that wars that produce higher oil prices are likely to lift the dollar, while wars that don’t lift energy prices will weigh the dollar down, Barrow said. He suspects that’s what will happen now.
“If oil prices continue to rise the dollar will continue to rise too, whether or not the conflict comes to a swift resolution. But if energy prices sink back, even if the conflict is ongoing, the dollar seems likely to slide,” he said. “We take this view because we feel that the dollar needs higher energy prices to stay firm. Without them the market will revert to the more bearish influences such as US debasement concerns that relate to huge government debt (which will rise much faster because of the conflict) and political pressure on the Fed to lower rates.”
Fertilizer pain: The closure of the Strait of Hormuz and the surge in fertilizer prices has altered expectations for U.S. planted acres, with more producers likely backing off some corn acres as a result of high input costs. Of course, things could change if the conflict does indeed cool down and the Strait re-opens. But for now, the squeeze is apparent.
As Josh Linville, vice president of fertilizer at StoneX, observed in an X post before grain markets gave up gains:
- In December, it took 75 bushels of corn (Chicago price) to pay for 1-ton of NOLA urea.
- Today, it is taking 126 bushels of corn to pay for the same ton of NOLA urea.
Check out this week’s Pro Farmer Podcast: What the Iran war means for U.S. acres
Palm oil bulls eye biodiesel demand: Last week’s historic rally in crude oil prices and sharp rise in freight rates as a result of the conflict in the Middle East has palm oil industry officials arguing for a potential boost to demand from the biodiesel sector and for food use, Reuters reported. Output from Indonesia and Malaysia hit a record in 2025, the report noted, with rising stocks weighing on prices. The conflict made palm oil suddenly attractive to the biodiesel industry, pushing prices to their highest in more than a year.
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