By: Arlan Suderman, Chief Commodities Economist
Arlan Suderman, StoneX Chief Commodity Economist, surveys the week’s critical flashpoints from the trading floor, weighing how geopolitics and policy could redirect global flows of grain, energy and protein.
“Ukraine does have an interest in bringing down at least a portion of that bridge”, Suderman notes, referring to last week’s bombing of pillars on the Kerch span. If the structure falls, clearance work “could be at risk here is 30% of Russia’s wheat exports… and 1 ½ million barrels per day of crude oil”. With Russia’s harvest season approaching, even a temporary channel closure could jolt wheat and crude benchmarks, already nudging fund managers to cover shorts and push WTI toward two-month highs near $65.
Suderman notes that China “built its economy and its military war machine based in part on trade surpluses”, once shipping $450 bn of goods annually to the U.S. The May 11 “90-day pause” reopened dialogue, and Beijing has since issued rare-earth export licenses after pressure from Washington. As negotiators meet in London, Suderman sees scope for a framework granting China “favorable access to our consumer market… in exchange for buying our commodities”, though full resolution “could take months… if not years”.
Domestic edible-oil demand hangs on the Environmental Protection Agency’s imminent rulings. First, updated Renewable Volume Obligations have cleared agency review and await White House release within “the next week to 10 days”. Second, small-refinery exemption decisions for 2024—and a backlog stretching to 2016—could offset those volumes. Third, the financing mechanism, Section 45Z, passed the House in the “big beautiful tax bill” but remains uncertain in the Senate. Removing the indirect land-use penalty would be “very positive not only for soy oil demand… but for ethanol demand”.
Cattle inventories remain “very low… due to a multi-year drought in the west”. Early herd rebuilding is “tightening our supplies even more”, while cheap feed has pushed carcass weights to records. Imports help but fail to meet demand, as consumer diets shift toward protein under the influence of GLP-1 drugs. Despite record cash cattle prices, “we’re seeing a resiliency of demand”, sustaining historically high beef valuations and reinforcing protein’s status as one of the year’s strongest commodity performers.
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---- Written by Gus Farrow
---- Expert: Arlan Suderman, StoneX Chief Commodities Economist
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