FYI: the last 2 sections of this blog will always be key releases that are easy to find, as well as the hedge recommendations tracker slide.
Also, during U.S. planting season, I’ll be working harder to shorten copy to just a few lines if possible. Let me know if what I did in tonight’s copy helps you get through everything but doesn’t leave too much out. Good luck this springtime!
#1 U.S. Strait of Hormuz Blockade: Initial Thoughts & Analysis–Potential Big Implications For U.S.-China Trade Relationship
1st & Foremost: It’s Critical To Remember That This Blockade Is Against Iran (and allies) Only From What I Understand…Why? Because If We Combine This Assumption w/My Other Assumption Below That The U.S. Is Directly Confronting China & Russia (Like We Did w/Venezuela), Then We Can See That There Is A Critical Timeline We Can Assume: That The U.S. Policy “Clock Is Ticking” In Terms of Success If We Don’t See Kinetic Conflict By Week’s End / Or Failure If We Do See Kinetic Conflict By Week’s End. In Other Words: I Think We’ll Find Out Soon Whether Iran Has The Capacity To Do Damage and/or China-Russia Become More Involved Militarily. An Oil Price High Could Be Something We’re Talking About By The End of This Month If The U.S. Policy of This Blockade Works.
So, what we want to keep watching is the number of ships transiting the Strait of Hormuz, along with how many ships come to the U.S. for our oil as a substitute (which if this occurs for a period longer than 10 days, I’d suggest our oil prices will start to rally in order to ration demand away from domestic usage); simultaneously, we also want to monitor the price of physical crude–both here at Cushing & in London with Brent. Note that the chart below which shows both of these has seen the Spot Brent rally back toward its major high of $144.11 in the aftermath of the U.S. blockade. I am going to strive to analyze these markets through the “noise” of news reports and focus on the hard data like this. And my takeaway in 10 days or so will be that, if the Brent price is making new highs, the U.S. blockade is still choking too much oil from getting through the Strait of Hormuz: and that the U.S. supplies aren’t able to offset completely. To this end, the national price of unleaded and diesel are really (along with cash fertilizer prices) what are going to matter most for agriculture economics as well as the overall health of the global economy.
2nd: As I Spoke About On The KRVN Mid-Day Update Today, I Think The Trade Needs To Re-Consider Their Position & “Bullishness” In The Soybean Complex In Light Of So Much of The S/D Fundamentals For U.S. Soybeans Hinges Upon China Demand…There’s Little That Can Be Done To Get Around This, In My View, Especially Given That The Soyoil Has Rallied So Much On The Domestic Bio-Fuel Demand/Consumption We’re Likely To See. Note In The Article Below How We Can “Connect The Dots” w/Iran & Venezuela, Along w/The Tariff Policy: All Lead Back To The U.S. & China, & China’s Desire To Displace The U.S. As The World’s Hegemon In My View. So, We Have To Ask: Does The U.S.-China Summit Still Happen In Early/Mid-May? And If Not How Much Premium Could There Be In The Soybean Futures? See Section #3 For My Analysis On This…
3rd: For More In-Depth Geo-Political Analysis I’ve Been Working On, I Invite You To Check-Out My New Podcast That I Do w/My Son, Tom–It’s Called Zuz On Commodities: BRIC-by-BRIC. Episode 3 Is Below.
#2 U.S. Wheat Weather-Funds Position-Crop Conditions Nexxus May Be [Finally] Forming
When Looking At These Three Top-Tier Factors of Price Determination, We See Consistency–Will The Market See It The Same Way? If we look at the COT data above, we see that the Man. Money Funds are back to a Net-Short positions for the SRW Wheat. To me, given the crop conditions today dropping another 1 point in Good-Excellent (which was more than the trade expected on newswire polls that I saw), and given that the upcoming 10 days of precip. look very dry for most of the HRW Wheat & a large chunk of the Western Corn-Belt, I’d think that additional short-covering and outright buying could be in the works…that the conditions are primed for this. Especially with the energy markets elevated. Note the past precip., and how it helped show us very easily why the crop conditions keep dropping–to a point where I really wonder how much they can recovery after this month. In addition, I’m seeing some weather outlooks suggest that early next week that the same very dry areas of KS & NE could see lows of 25-26 degrees…does this add-to the worsening crop conditions? It’s not likely to help them! And we also see that the choice to use the AI weather models has been a good one so far; they have helped cut through the broad-brush tactics of the traditional weather models; we have now a well-defined area of drought and weather pattern thanks to the AI models in my view…from Omaha, NE to El Paso, TX we can draw a line and anything West of this line is likely seeing significant shortfalls in precip. as well as worsening drought due to rising temps. I am wanting wheat to lead to the upside this week; if it can, then targets for the upside in both wheat and corn could be in-play.
#3 Soybean Analysis: Looking At The Potential For NO U.S.-China Summit In May–Does This Initiate The “Sell Signal” I’ve Been Watching-For?
November Soybean Seasonal Suggests A Tougher May Price-Action Based Upon The Last 6 Years. As you can see by the chart above, only 2023 saw a big move higher in the month of May for November soybeans; recall that the Brazil had only a 154.5 MMT crop size. So, I do think that we could be setting-up for a move lower, especially if we have a break-down between the U.S. & China in their summit in May. For this reason, and in order to more than offset the losses in the bought puts for 2026 hedges [which we stand at a little over a 2:1 risk-reward in terms of money spent on puts vs. how much the Nov. Soybean have rallied], I will take the potential weekly and daily “sell” signals at face-value…and we are seeing these signals now after today’s close. Thus, my mindset is to add-to cash-related sales from our 40% current level; at the same time, the May expiration puts based-off Nov. Futures I’ll likely recommend replacing and getting a higher floor price in place. Lastly, we can see by the COT chart below, it would appear to me that the Managed Money Funds are likely at or near their peak in Net-Longs…especially as planting takes-hold in the northern hemisphere and I continue to see more news & countries agriculture sector indicate a significant issue with the fertilizer for corn acres; this includes Brazil and Ukraine.
#4 Cattle: We’re On “High Alert” To Get Q3 Hedges In Place: Starting This Week
With April Hogs getting ready to expire, we need to see these perform to the upside: why would May move higher when it becomes lead-month? I’m hearing of substantial foot-and-mouth disease occurring in key areas of China’s hog provinces, so I’ll be watching the Chinese hog prices. In addition, while the Live Cattle are likely a little “tired”, can we see the Feeders pick up the slack and rally on weather here in the short-term? I am hoping so, but I also have one eye on Wall Street and one eye on Corn. All of these is leading-up to moving forward with Live Cattle hedges for Q3, using bought puts/short calls spreads. Why not just short futures? I want to have the ability to better lift hedges if the markets move against us (rally) after the hedges in place in case they move limit-up for some reason. My goal will be to make the bought put and short call be at around even money in terms of up-front cost. This is likely to make the strategy very sensitive to the futures market by design. My plan is to start with Live Cattle since they are more sensitive to the boxed beef and consumer sentiment metrics, plus we can see that the Man. Money Funds are much more Net-Long in Live Cattle vs. the Feeders. I will eventually want to hedge Feeders in case yearlings enter the feedlots due to a continuation of the drought in the Plains states. But I will stagger the recommendation in order to spread risk. Please call me if you have specific needs for your ranch and/or questions.
#5 “BREAD-CRUMB” ANALYSIS– Major Blogs And/Or Reports-Updates In Case You Missed Them
FEBRUARY 15, 2026 BLOG ON SOYBEAN HEDGE ANALYSIS AHEAD OF THE USDA’S AGR. OUTLOOK FORUM & BASELINE PROJECTIONS
END OF JANUARY BLOG ON SOYBEAN HEDGE ANALYSIS FOR BASE PRICE CROP INSURANCE PROTECTION
#7 Hedge-Tracker Recommendations Slide
