Geo-Political War Risk Premium: How Conflict is Fueling Commodity Prices

[AgrivilleAdmin]

Ag Commodity Corner+ podcast

The escalating war in the Middle East with Iran/Isreal is causing crude oil futures to surge but also wheat futures as the Persian Gulf and the Strait of Hormuth is a key oil/wheat/fertilizer export route for the world.

Add too much rain in U.S. winter wheat country at harvest, with a drought in Europe, Russia and Western Canada and we have an old fashion fund short covering rally in wheat. The heat wave for the U.S. Central Corn Belt could stress crops but will it last beyond 4-5 days? The rains this weekend for Western Canada better verify or materialize or its $800 - $850 for canola futures!

U.S. Fed kicked the can down the road will buy more time as U.S. consumer/economy and MAG 7/AI demand all remain resilient despite all off the U.S. tariff and war noise.

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[MoeAgostino]

Hello everyone? So what do think are the chances for higher crude oil prices? and what about wheat is this the start of a new uptrend?
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[crusher]

Thanks for sharing some positive news for our markets although it's due to negative circumstances. The wheat price still leads to negative returns, unless you're fortunate enough to have a bumper crop coming. Cheers, and have a great weekend!

[ajl]

Overall the impact of the new war is negative, as in it will mainly serve to jack input costs. Wheat came up this week but my crop is pooched with the rain coming too late and now it won't quit so a new flush of weeds will be in the thin crop. Most elevators converted the futures jump into wider basis. Higher crude prices would serve to derail growth in the US which would also be negative as they have to service 36T in debt.