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Strait of Hormuz tensions fuel market volatility

A delayed ultimatum from President Trump for Iran to reopen the Strait of Hormuz is keeping volatility in corn, soybean and wheat futures prices as the week begins.

Garrett Toay with AgTrader Talk tells Brownfield the energy markets are on edge, given the Strait of Hormuz is a key global oil trade route.

“The administration is sensitive of high crude oil prices,” he says. “It doesn’t influence policy because it seems like the conversations of opening up the strait might have opened up a road for de-escalation, but does the stock market and crude oil reaction influence policy? It seems like the objectives have changed.”

Toay says U.S. farmers remain in a wait-and-see period with policy decisions and geopolitical developments expected to continue to drive volatility.

The Iran conflict has had a mixed impact for U.S. farmers so far, with higher commodity prices happening at a time of rising input costs, especially fuel and fertilizer.

“Locally, gasoline is at $4 per gallon and diesel is at $5 per gallon. We’re starting to feel that at the pump.”

Toay says longer disruptions could continue to increase costs and market instability for agriculture.