In a recent discussion between Farm Director KC Sheperd and OSU Crop Marketing Specialist Dr. Todd Hubbs, the conversation centered on the significant market volatility in the wheat, corn, and milo markets caused by ongoing geopolitical tensions and upcoming USDA reports. Dr. Hubbs noted that the conflict with Iran has triggered an energy price shock that has spilled over into the agricultural complex. “We’ve seen basically an energy price shock, and it’s spilled over into the ag complex. We’ve seen some run-ups and some run-downs in our markets over the last week, and I expect that kind of volatility to continue,” Hubbs explained.
Wheat Markets and the Energy Influence
The wheat market has historical ties to movements in West Texas Intermediate (WTI) crude oil, particularly during energy price shocks. Since the mid-2000s, large oil price rallies have often led to index funds and speculators moving into agricultural commodities as an inflation hedge.
Dr. Hubbs highlighted several factors currently influencing wheat prices:
- Stagflation Concerns: There is growing worry about stagnating economic growth alongside inflation, though Hubbs noted that it is too early to definitively call such a scenario based on February’s data.
- Input Costs: While Oklahoma producers benefit from higher wheat prices, the cost of inputs like fertilizer and diesel has risen substantially.
- Weather vs. War: Despite the focus on geopolitics, extreme drought conditions west of I-35 remain a critical factor, with no rain in the immediate forecast for winter wheat areas.
- Supply Chain Disruptions: Issues in the Strait of Hormuz are impacting energy and fertilizer markets, potentially forcing Middle Eastern wheat buyers to seek alternative supply chains.
“If you have a target price in mind, keep your bids current. It might trip through them overnight. Even if the bid you have in mind seems far-fetched, still keep them current,” Hubbs advised for those marketing hard red winter wheat.
Corn and Milo Outlook
The demand for corn and milo remains steady, with the industry keeping a close eye on the upcoming March 31st USDA reports, including Prospective Plantings and Grain Stocks.
| Commodity | Market Status & Outlook |
| Corn | On pace to hit USDA’s 3.3 billion export number; ethanol grinding remains decent. |
| Milo | Converging on the 225 million bushel export pace; China remains a consistent buyer. |
| Acreage | Expectations for lower corn acreage and higher soybean acreage compared to last year. |
Dr. Hubbs expressed some skepticism regarding the USDA’s “feed and residual” numbers for corn, suggesting the upcoming stocks report will provide much-needed clarity. “I think a lot of people are fading the USDA’s feed and residual numbers right now. If the stocks report sort of justifies the number USDA has, I think that’s going to be supportive because feed and residual is a derived number,” Hubbs said.
Anticipating the March 31st Reports
The end-of-month reports are expected to be major market movers. Dr. Hubbs noted that while geopolitical stories add to volatility, the fundamentals revealed in these reports will be paramount for Oklahoma growers. He specifically pointed to potential weakness in spring wheat acreage as a supportive factor for the wheat market.
“I don’t want people to think that this geopolitical story is going to fade per se; it’s just additive on top of all the volatility inside the geopolitical story,” Hubbs concluded.
