USDA Report Estimates - June 2026
USDA Grain S&D Report - Trade Estimates for the monthly publication
Matt Zeller
- Grains & Oilseeds
Perspective: Morning Commentary for April 17
By: Arlan Suderman, Chief Commodities Economist
April 17 – The S&P 500 stock index is poised for another record day this morning amid ongoing hopes that we will soon see peace in the Middle East. Stock futures surged, adding to overnight gains, on reports that the Strait of Hormuz is temporarily reopened to all traffic. The VIX traded near 17 to start the morning, while the dollar index is trading near 97.6. Yields on 10-year Treasuries are trading near 4.24%, while yields on 2-year Treasuries are trading near 3.72%. Crude oil prices pulled back to trade near $84 per barrel this morning, while the grain and oilseed markets were modestly weaker to start today’s end of the week session. We again face a weekend when headlines will likely continue to flow while the markets are closed, but sentiment is optimistic to start the day, while traders still keep an eye on President Trump’s social media account for any possible shifts.
Direct talks between Iran and the United States are expected to occur in Islamabad, perhaps on Sunday, according to news reports. President Trump says a deal to end the war could soon be reached. U.S. officials are gathering with our allies today to discuss normalizing conditions in the Middle East. That meeting will reportedly be chaired by France and Britain, with some 40 countries possibly represented. Some news reports suggest that there is a three-page plan to end the war being considered by Iran, Israel and the United States. The US continues to insist that Iran give up its nuclear ambitions, although there are indications that Trump’s “never have a nuclear weapon” has morphed into no nuclear activity for 20 years. The United States would also like to remove existing enriched uranium from Iran that could be used in suitcase bombs to terrorize population centers. Unconfirmed reports suggest that Iran would consider turning over its uranium if the United States would free up the $20 billion in Iranian assets it froze due to Iran’s nuclear program.
Those same reports suggest that the three-page document also outlines requirements for the reopening of the Strait of Hormuz, but sources say that the two sides still have significant differences on that matter. The United States would like the Strait to go back to international waters status whereby freight could pass through freely without charge, while Iran would like to collect a toll from everyone passing through as a revenue generator. Other Gulf States would certainly be expected to side with the United States on that issue, but that’s what negotiations are about. This latter issue of reopening the Strait of Hormuz is the primary issue that the markets are focused on currently. Once it is opened, the focus will then shift to assessing damage done to energy and fertilizer infrastructure, and the time that it will take to repair it. That will provide a sense of how much output of both will be reduced once the flows resume, and the scope of time it will take for those flows to return to prewar levels.
Iran’s foreign minister declared within the hour that the Strait of Hormuz is totally open for traffic for the remainder of the Lebanon ceasefire, but now we’ll need to see who wants to be first to test passage if that’s true, and whether this weekend’s talks can make that permanent. This is a huge step toward normalizing things in the Middle East, although it is just a first step in doing so, as indicated above. Yet, it is an essential step in the process. The focus now will shift to this weekend’s anticipated face-to-face peace talks in Pakistan. Few expect that we would see a completed peace agreement come out of those talks, but there is hope that we could see a substantial agreement in principle in these meetings, allowing the details to be worked out over the next 60 days. Restoring flow through the Strait does not immediately restore fuel and fertilizer levels around the world. That will take time, especially since infrastructure damage will continue to keep output curtailed by some yet unknown level for some time.
I previously outlined oil and product shortages that are becoming acute in Asia due to the Strait’s closure, along with some areas of Europe. Prices in those regions are considerably above the derivatives markets. That creates an arbitrage situation in the cash market to incentivize shifting inventories from areas that have them to areas that don’t. We’re seeing this play out in a surge in traffic through the Panama Canal, where tanker and cargo ships now longer lines to enter the Canal. Some shippers are willing to pay significant premiums at auction to move to the front of the line to get their energy or cargo to Asia quicker. A tanker carrying liquified petroleum gas reportedly paid $4 million recently to get faster passage, on top of the normal Canal fees. We’re seeing a surge in U.S. energy, and even some fertilizer, exports to Asia and elsewhere to fill the gaps. As high as U.S. energy and fertilizer costs are, they are much higher in Asia and Europe. I previously stated that the United States basically had most of the fertilizer that it needed onshore for this growing season, but that arbitrage in prices now has some of those inventories reversing direction to be exported again. Crop production is expected to be impacted to a more limited nature in the United States this growing season, with larger impacts in Asia and Europe. Significant energy and fertilizer impacts are yet to be felt, but at least we may be close to turning the corner.
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