Geopolitical Shocks and EPA Action Fail to Lift Grains
Bertrand Oesterle, StoneX Vice-President of Clearing and Execution Sales, discusses how geopolitical shocks and regulatory moves influenced but ultimately failed to sustain a rally in grains and oilseeds.
Key Takeaways
Israel–Iran conflict spurred energy and grains rally, but markets quickly corrected
EPA biodiesel mandate lifted soybean oil, but pressured feed and related crops
Despite multiple bullish catalysts, bearish sentiment and supply outlook dominate
Geopolitics Briefly Rattle Grains, Then Fade
Oesterle recounts the market’s reaction to Israel’s June 13th strikes on Iranian nuclear and missile sites, followed by Iran’s retaliation. Energy prices surged, with Brent climbing above $78 before falling back to $72. Grains and oilseeds saw similar volatility. He also underscores the strategic risk to fertilizer markets, as Iran is a top exporter of both urea and ammonia.
EPA Mandate Sparks a Soy Complex Rebound
The EPA’s updated biodiesel mandate raised volume targets from 3.35 to 4.45 billion gallons. Soybean oil went limit up on Friday 13 June, and again the following Monday, although soymeal dropped, which is viewed as bearish for feed grains like corn and wheat. This surge in soy oil extended to rapeseed, helping farmers secure better sales, as they may hold wheat longer thanks to this rapeseed-related treasury support.
Spec Positioning and Supply Overhang Weigh on Rally
Despite bullish developments, the rally fizzled. Only 5–7K lots in Paris wheat were covered out of 292.4K shorts. Oesterle notes the WASDE report offered no support either, keeping Chinese output steady while adding 700K tonnes to stocks. Meanwhile, China’s wheat harvest is nearly complete. On the supportive side, U.S. crush data for K25 hit a May record at 192.8 mb. Yet funds remain heavily short across grains, with few signs of a shift.
Oesterle emphasizes that bears still control grains markets. US crop conditions remain generally favourable, despite minor declines in winter wheat and soybean ratings. Brazil’s second corn harvest is progressing, if slower than last year. Risks exist, but are scattered. These include dryness in western Canada, floods in Argentina, and dry conditions in France and Manitoba. Yet none have yet coalesced into a catalyst capable of shifting the broader sentiment.
Make Market Insights Your Competitive Advantage
Access live prices, supply and demand data and actionable market commentary across commodities, equities, currencies and more. Sign up for StoneX Market Intelligence today and receive a free 14-day trial.
---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Bertrand Oesterle, StoneX VP of Clearing and Execution Sales
Grains & Oilseeds
The subsidiaries of StoneX Group Inc. provide financial products and services, including, but not limited to, physical commodities, securities, clearing, global payments, risk management, asset management, foreign exchange, and exchange-traded and over-the-counter derivatives. These financial products and services are offered in accordance with the applicable laws in the jurisdictions in which they are provided and are subject to specific terms, conditions, and restrictions contained in the terms of business applicable to each such offering. Not all products and services are available in all countries. The products and services offered by the StoneX Group of companies involve risk of loss and may not be suitable for all investors. Full Disclaimer. This content is not intended for residents of any particular country, and the information herein is not advice nor a recommendation to trade nor does it constitute an offer or solicitation to buy or sell any financial product or service, by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Please refer to the Regulatory Disclosure section for entity-specific disclosures. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The information herein is provided for informational purposes only. This information is provided on an ‘as-is’ basis and may contain statements and opinions of the StoneX Group of companies as well as excerpts and/or information from public sources and third parties and no warranty, whether express or implied, is given as to its completeness or accuracy. Each company within the StoneX Group of companies (on its own behalf and on behalf of its directors, employees and agents) disclaims any and all liability as well as any third-party claim that may arise from the accuracy and/or completeness of the information detailed herein, as well as the use of or reliance on this information by the recipient, any member of its group or any third party.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
