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Table of Contents

Week In Review

The Week in Under 60 Seconds

Markets spent another week waiting on two things: a Middle East deal and Chinese purchases.

This time, they got both.

The U.S. and Iran signed a framework agreement that reopened the Strait of Hormuz and sent energies sharply lower to begin the week. At the same time, China finally stepped back into the soybean market, with its first confirmed U.S. soybean purchase since February.

Meanwhile, soybean oil suffered a brutal week of liquidation, corn found support from strong exports and China chatter, while wheat and cotton quietly became the week’s strongest performers.

Heading into a new week, markets get to digest Iran's claims that the Strait is closed... again. Plus, another round of Trump tweets threatening Iran in classic Trump fashion.

All of it is unfolding just seven trading days ahead of the June 30 Acreage and Quarterly Stocks reports. The market's attention remains fixed on Iran, China, and the latest headlines, but a fundamentally heavy backdrop of benign U.S. weather, strong crop conditions, and expectations for larger acreage hasn't gone away.

Energies & Macro

All aboard the headline-fueled, geopolitical (struggle) bus.

Early last week, a signed U.S.-Iran framework agreement extended the ceasefire and reopened the Strait of Hormuz, sent crude and diesel sharply lower as traders stripped geopolitical risk premium from the market. By week’s end, however, Iran was claiming the Strait had been closed again, reminding everyone just how volatile the situation remains.

While petroleum markets focused on geopolitics, biofuel markets continued telling a different story.

Key Takeaways

  • The U.S. and Iran signed a framework agreement extending the ceasefire and reopening the Strait of Hormuz.

  • WTI crude oil fell more than $4/bbl during the week, while heating oil futures plunged nearly 40 cents per gallon over a three-session stretch.

  • D4 RINs traded to new highs above $2.40 before easing slightly late in the week.

  • May D4 RIN generation improved slightly month on month to 736 million gallons but remains well-below the pace needed to comfortably satisfy EPA’s record-large RVO.

  • The market's message is hard to miss: D4 RINs have overtaken diesel futures on a per-gallon basis, a powerful signal that compliance demand is and will continue to outpace biomass-based diesel production.

  • Wednesday, the Fed held rates steady, but its outlook shifted sharply. Nine of 19 policymakers now project at least one rate increase by year-end, up from none in March, while only one still forecasts a rate cut.

  • The shift helped push the U.S. Dollar Index back above 100 and to its highest level in more than a year, even as the relationship between Treasury yields and the dollar remains far weaker than it was in 2022-24.

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Bottom Line: Energies and Macro

The market spent the week trading crude oil. It probably should have been watching RINs. Unfortunately, the market's attention deficit problem appears alive and well as we head into another week of geopolitical chaos.

Soy Complex

Finally.

Four+ months later, China is finally back. After weeks of rumors and chatter, we have China’s first confirmed purchase of U.S. beans since February. Under normal circumstances, that would have been the story of the week.

Instead, soybean oil stole the spotlight as a mass exodus of longs ripped through the market, dragging crush margins sharply lower despite exceptionally strong underlying demand.

Key Takeaways

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