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An energy-led commodity rally broadened out in April, with grain market bulls looking to money flows to provide a continued tailwind for agricultural commodities.
The Bloomberg Commodity Total Return Index delivered a 4.2% monthly gain in April, noted Ole Hansen, head of commodity strategy at Saxo Bank. That brought the index’s year-to-date return to 30%, with all sectors except precious metals posting positive returns.
Energy remained in the driver’s seat, as oil and fuel prices pushed to new highs in late April on expectations for a lengthy closure of the Strait of Hormuz.The energy sector rose 7.7% in April, following a 40.7% March rise that’s left it higher by 74% year to date.
“Top individual performers included Brent crude, cotton, gasoline, diesel and soybean oil, while gains in wheat and copper highlighted how support is broadening beyond the hydrocarbon sector,” Hansen said, in a note to clients.
- “In many ways, April marked the clearest sign yet that what began as an oil shock is developing into a wider commodity inflation cycle, driven by supply-chain disruption, rising transport costs, fertiliser shortages and growing uncertainty around monetary policy and currency markets,” he said.
Check out this week’s Pro Farmer newsletter for our take on the broadening commodity rally and why it requires producers to remain nimble in their marketing plans.
Biofuel test: Companies that turn soybeans into biodiesel will need to boost production by 60% this year to meet record biofuel blending targets set by the EPA – a target that industry groups and experts warn could prove unreachable, Reuters reported, noting that failure risks stoking a further rise in diesel prices.
The EPA set biodiesel and renewable diesel volume requirements of 5.4 billion gallons for 2026 and 5.7 billion for 2027, up from 3.35 billion last year. Factoring in exports and other considerations, EPA estimates that hitting the new obligations will require a supply of 6.07 billion gallons this year, the report noted.
June ‘tipping point’: The oil market is four weeks from a “tipping point” that would see prices shoot significantly higher, traders warned in a Financial Times report, as the shutdown of the Strait of Hormuz continues to draw down global stockpiles. Traders and analysts cited in the report warned that global stocks of crude, gasoline, diesel and jet fuel will fall to critically low levels by the end of May, which would be followed by a rapid escalation in prices.
- “We do not have months,” Frederic Lasserre, head of research at Gunvor, one of the world’s largest oil traders, told the FT. “It goes beyond gasoline at the pumps to industry shutting down and you enter recession. The tipping point is clearly June…This is the point at which something has to give.”
Contrarian view: Phil Flynn of Price Futures Group argues in a Friday note that a case can be made that there’s more risk to the downside than the upside for the crude-oil market. He contends that while headline risk has kept a floor under prices, the lack of actual full closure or major new incidents has allowed crude to stabilize rather than run away to the upside. If President Trump greenlights new military action Brent could surge back to the $120-$130 a barrel zone “in a heartbeat,” he acknowledged, but until then the market is pricing in “maximum pressure” that is delivering pain to Tehran. “Any signs that Iran comes to their senses than oil could crash to fill the Iran war gap on the charts,” he wrote.
Dems oppose USDA meatpacking proposal: Congressional Democrats have asked USDA to drop a proposed rule that would permanently increase line speeds at meatpacking facilities, Civil Eats reported. The USDA in February proposed rules that would increase speeds on production lines at poultry and pork-processing plants, the report said. In a letter led by Sen. Cory Booker of New Jersey, congressional Democrats asked the agency to halt further rulemaking, arguing it would lead to more worker injuries and less safe food.
Ultraprocessed foods lawsuit: Food giants Kraft Heinz, PepsiCo and others were named in a consumer lawsuit that claims their products are designed to be addictive, Food Dive reported. The complaint filed in the U.S. District Court for the Eastern District of Wisconsin seeks $1 billion in damages. It argues ultraprocessed foods are scientifically engineered to be addictive and that companies took a page out of the tobacco industry’s playbook when marketing them to children.
Food Dive notes that recent government and consumer lawsuits have aimed to compare the processed food sector to the tobacco industry, where litigation led to billions of dollars in settlements and marketing restrictions. But plaintiffs have had difficulty proving the connection between health issues and processed foods.
- Last fall, a judge threw out the first consumer lawsuit against packaged food giants, after the court determined the complaint was “woefully deficient” because the plaintiff failed to prove ultraprocessed foods caused his injuries and instead focused on the addictive nature of these products,the report said.
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