Ag analysts are closely watching the Middle East after threats by Iran to close the Strait of Hormuz. The relatively short marine passageway is vital to global oil shipping, and any disruptions could translate to higher oil prices.
Iran is threatening to close the 90-mile passageway after U.S. attacks on nuclear facilities there. The route is a popular choice for oil shipments, carrying around 20 million barrels of oil each day. Analysts with Hedgepoint say any jump in oil prices will hit shippers first, with fuel being one of the largest costs.
Oil prices are up around 10 percent since earlier this month. AAA currently shows the national average for a gallon of diesel is around $3.69, and one month ago, the same gallon was $3.55.
Related Stories
Having a good read on fuel prices is a must during harvest, but one analyst says grain farmers should also be watching the crude oil markets.
Support policies that keep U.S. biofuels at the table—marine demand could materially lift corn grind, crush margins, and rural jobs.
China is not one of our top suppliers of cooking oil, according to USDA ERS data, but does export a lot of used cooking oil to the U.S. for biofuel production.
Treat storage as risk management and logistics, and budget to break even since export growth is unlikely to absorb bigger U.S. corn and soybean crops.
President Trump has long supported a direct line from Alberta’s oil fields to the Midwest.
Expect a steady corn grind and selective basis strength where exports and local blending stay active.
American Coalition for Ethanol’s Ron Lamberty shares the significance of California’s approval, opening up the country’s largest gasoline market to a cleaner-burning, often lower-cost fuel option.
Higher domestic rail tariffs and mixed capacity shifts will influence grain movement this harvest. Strong corn exports provide momentum, but logistics costs remain a critical factor.
