U.S. Launches New Strikes in Iran Targeting Military Site, With No Accord in Sight
Bayer faces antitrust lawsuit over corn seed market dominance | 45Z import restrictions topic at Treasury/IRS hearing
| LINKS |
Link: Board of Trade Concept Signals New Phase in U.S./China Talks
Link: Video: Wiesemeyer’s Perspectives, May 22
Link: Audio: Wiesemeyer’s Perspectives, May 22
| Updates: Policy/News/Markets, May 28, 2026 |
| UP FRONT |
TOP STORIES
— 45Z import restrictions face scrutiny at Treasury/IRS hearing: Three-day hearing highlights deep divisions over whether imported feedstocks should qualify for the clean fuel tax credit as final guidance nears.
— Fresh U.S. strikes test fragile Iran ceasefire: New American attacks near Bandar Abbas amid strained peace negotiations as Washington calls the strikes “defensive.”
— Deal signals collide: Conflicting public statements from Washington and Tehran obscure whether a real U.S./Iran framework agreement is actually taking shape, even as oil markets react sharply to every headline.
— Trump Cabinet meeting focuses on Iran, fraud crackdown, energy dominance: Senior officials highlight Iran diplomacy, sweeping anti-fraud initiatives, record domestic energy output, tariffs, manufacturing investment, immigration enforcement, and D.C. infrastructure projects.
— Trade realignment is a potential China purchasing impact: Grain industry leaders weigh how a surge in Chinese purchases under any new trade framework could tighten Gulf export capacity, widen interior basis levels, and reshape global agricultural trade flows.
— USTR nears public comment launch on U.S./China Board of Trade: Trade Representative Greer says a Federal Register notice seeking input on tariff reductions for Chinese goods is coming “shortly” as the administration advances its managed-trade framework with Beijing.
— U.S., Mexico launch USMCA review talks: The first bilateral negotiating round opens in Mexico City, with agriculture, rules of origin, and economic security expected to dominate an intensive series of upcoming sessions.
FINANCIAL MARKETS
— Equities today: Asian markets mostly fell as technology and AI shares pulled back and investors monitored fresh U.S. military action against Iran.
— Dollar climbs on Iran strike escalation, rate fears: The dollar index rises toward seven-week highs following new U.S. strikes on Iran and persistent inflation concerns ahead of key PCE data.
— Equities yesterday: Major U.S. indexes posted modest gains, with the Dow up 0.36%, the Nasdaq up 0.07%, and the S&P 500 essentially flat.
— PCE inflation seen rising again ahead of June Fed meeting: Economists expect April headline PCE to climb to 3.9% annually, reinforcing expectations the Fed holds rates steady at its June meeting.
— Kashkari signals Fed still focused on inflation risks: The Minneapolis Fed president says the labor market remains solid while rising energy and fertilizer costs pose ongoing inflation risks that could force more aggressive Fed action.
AGRIBUSINESS
— Bayer faces antitrust lawsuit over corn seed market dominance: Iowa-based Latham Quality alleges Bayer used anti-competitive tactics to suppress competition and extract excessive profits in the genetically engineered corn seed market after key patent protections expired.
AG ECONOMY
—Land O’Lakes CEO warns of deepening farm crisis: Wall Street Journal interview highlights rising farm bankruptcies, labor shortages and growing pressure on rural America as producers struggle with weak profitability and mounting financial stress.
AG MARKETS
— Australia braces for new China beef tariff: Beijing warns Australia is near its annual beef import quota, potentially triggering a 55% tariff by mid-June, though producers say strong U.S. and Southeast Asian demand will cushion the impact.
—Brazilian corn exports surge in May as second crop boosts global competitiveness: Shipments through the third week of May already exceed last year’s monthly total by more than fivefold, despite sharply lower prices.
— Agriculture markets yesterday: Corn, soybeans, and wheat all closed lower, while livestock markets posted gains.
FARM POLICY
— FSA opens review period for new ARC/PLC base acre allocations: Landowners can review updated base acre summaries beginning June 1 following the addition of up to 30 million new base acres authorized under the One Big Beautiful Bill Act.
— SNAP cuts become central hurdle in Senate farm bill talks: Democrats push to delay food aid cost shifts as Republicans resist reopening major changes enacted under last year’s tax-and-spending law.
ENERGY MARKETS & POLICY
— Thursday: Oil rebounds after fresh U.S. strikes on Iran: Crude prices climb roughly 2% as renewed military action near the Strait of Hormuz revives supply disruption fears after the prior session’s sharp selloff.
— Wednesday: Oil slides on Iran deal hopes: Crude benchmarks fall more than 5% to five-week lows as markets price in the possibility of a U.S./Iran framework agreement that could eventually reopen Hormuz shipping lanes.
WEATHER
— NWS outlook: Widespread showers and thunderstorms to persist across the Southern U.S. through the end of the week.
| TOP STORIES—45Z import restrictions face scrutiny at Treasury/IRS hearingThree-day hearing highlights deep divisions over whether imported feedstocks should qualify for the clean fuel tax credit as final guidance nears Companies, farm groups and biofuel trade associations are clashing over whether imported feedstocks should qualify for the Section 45Z Clean Fuel Production Credit as the Internal Revenue Service and Treasury Department continue a three-day public hearing on the proposed rule. The hearing, which began Wednesday and runs through Friday, May 27-29, was expanded from a single day because of the high volume of testimony requests tied to one of the most consequential clean fuel policies affecting agriculture, energy and trade markets. At issue is whether imported crops, used cooking oil, tallow and other foreign-origin feedstocks should receive the same tax treatment as domestically sourced materials under the 45Z credit, which replaced several earlier biofuel incentives under the One Big Beautiful Bill Act. Farm organizations, soybean interests and some ethanol producers argued the final rule should prioritize U.S.-grown feedstocks and domestic processing capacity, warning that unrestricted imports could weaken the policy’s intended benefits for rural America and U.S. agriculture. Much of the concern has centered on imported used cooking oil from Asia, which critics say can be difficult to verify and may undercut demand for U.S. soybean oil and other domestic biofuel inputs. Renewable diesel producers, sustainable aviation fuel developers and some refining groups pushed back against strict sourcing restrictions, arguing that global feedstock flexibility is necessary to maintain adequate supplies and support continued investment in low-carbon fuel production. Industry representatives warned tighter import limitations could raise production costs, disrupt supply chains and slow expansion plans for renewable fuels. Biofuel groups push IRS for new model to calculate tax credit. The Renewable Fuels Association, Coalition for Renewable Natural Gas, Amp Americas and other groups urged federal agencies to update the Department of Energy’s emissions model released earlier this year, arguing it no longer reflects changes Congress made in the GOP tax law. A major flashpoint involves indirect land use change, or emissions tied to shifting global crop production patterns when farmland is diverted toward biofuel feedstocks. The original framework required companies to account for those emissions, but the new tax law removed that requirement, prompting industry groups to argue the DOE model should be revised accordingly. “Delays are creating tremendous uncertainty and investment risk in the marketplace,” Renewable Fuels Association President and CEO Geoff Cooper told agency lawyers during the hearing. Cooper warned that prolonged delays in finalizing the rules and updating the GREET model are creating significant uncertainty for producers attempting to make operational and investment decisions during the 2026 tax year. “We are nearly halfway through the 2026 tax year, and still clean fuel producers do not have access to the model required for determining emissions rates,” Cooper said, noting that emissions calculations ultimately determine the value of the 45Z credit. He argued that the lack of clarity is increasing investment risk and limiting participation in the program Congress intended to expand through OBBBA. Farm groups also focused heavily on how sustainable agricultural practices will be incorporated into the lifecycle emissions calculations that determine credit eligibility and value. The National Sorghum Producers and the National Grain and Feed Association pressed agencies to ensure the model properly recognizes practices such as cover cropping, reduced fertilizer use and other conservation measures. National Sorghum Producers consultant John Duff said the proposed framework appears headed in the right direction for allowing farmers to benefit from the tax credit, but warned that the technical details of the modeling system will determine whether the program succeeds economically for producers. A major focus of the testimony involved revisions to the 45ZCF-GREET model, which is used to calculate lifecycle greenhouse gas emissions from transportation fuels. RFA urged Treasury and the Department of Energy to add separate pathways for ethanol produced from cellulosic corn fiber and sorghum kernel fiber, arguing those fuels deliver very low emissions rates but currently are excluded from the model. The ethanol group also asked Treasury to address what it described as an unintended penalty against ethanol facilities using combined heat and power (CHP) systems. RFA said many ethanol plants invested heavily in CHP technology specifically to improve efficiency and reduce emissions, adding that the current modeling approach discourages investments the program was designed to reward. Meanwhile, RFA voiced support for incorporating regenerative agriculture practices into the 45Z framework but cautioned Treasury against creating burdensome certification and recordkeeping systems. The organization recommended a science-based and market-oriented “book-and-claim” structure that would allow agricultural sustainability attributes to move more flexibly through the supply chain. The hearing also exposed broader disagreements across industries over how the 45Z credit should function operationally. The Heritage Foundation argued the proposed rules lack sufficient safeguards and could allow producers to purchase clean electricity credits in one region while continuing to rely on fossil fuel-powered operations elsewhere. RFA additionally raised concerns about Treasury’s proposed inclusion of “undenatured ethanol” within the definition of low-greenhouse-gas ethanol, warning the language could conflict with longstanding EPA and Treasury rules prohibiting credits on transportation fuel produced from another transportation fuel already eligible for credits. The group also called for additional guidance and safe harbors related to prevailing wage and apprenticeship (PWA) compliance requirements, arguing current definitions and enforcement processes remain confusing and administratively burdensome for clean fuel producers. Fuel retailers and marketers also pushed Treasury officials on transparency issues. NATSO and SIGMA: America’s Leading Fuel Marketers argued biofuel producers should be required to disclose the value of the 45Z credit when fuel is sold so downstream wholesalers, truck stops and retailers can negotiate pricing that reflects the subsidy’s value. But ethanol producers cautioned that may not be practical under the current system. Eric Sievers, secretary at ethanol refinery Aztalan Bio LLC, told the hearing that producers often do not know the value of the tax credit quickly enough to communicate that information to fuel buyers in real time. The debate highlights the growing tension between competing goals for the 45Z program — rewarding low-carbon fuels, ensuring transparency throughout the supply chain, recognizing on-farm conservation practices and preventing potential loopholes — as Treasury, the IRS and the Department of Energy work toward finalizing the rules. Pivot Bio CEO Chris Abbott argued that the U.S. should recognize Biological Nitrogen Management practices within the 45Z framework, positioning domestically produced biological fertilizers as a way to reduce reliance on imported synthetic nutrients. Abbott tied the issue directly to the ongoing conflict involving Iran and the disruption of shipping through the Strait of Hormuz, warning that fertilizer supply chain problems could extend well beyond the current crop year. Abbott argued the situation demonstrates the vulnerability of U.S. agriculture to foreign fertilizer supply chains and global market volatility, particularly for nitrogen products. He said biological nitrogen technologies offer a commercially available domestic alternative that can reduce dependence on imported synthetic fertilizer while helping stabilize farm input costs. Abbott also framed the debate as part of a broader push for domestic agricultural resilience, saying supply disruptions this spring exposed the limited alternatives available to farmers when global fertilizer markets tighten. He argued that encouraging domestic biological fertilizer production and rewarding practices that reduce foreign input dependence would strengthen both farm profitability and long-term supply chain security. The comments come as Treasury continues work on implementing the Section 45Z credit, which replaced the long-standing $1-per-gallon Biodiesel Blenders’ Tax Credit with a more complex producer-focused system tied to carbon intensity scores, feedstock sourcing, and production methods. NATSO and SIGMA contend that the complexity of the 45Z structure makes it difficult for downstream fuel retailers to determine the value attached to individual gallons of biofuel, limiting their ability to negotiate lower prices. The groups cited a recent GlobalData study (link) that found as little as 20% of the Section 45Z credit value currently flows through the supply chain to blenders and consumers. By comparison, they said the previous Biodiesel Blenders’ Tax Credit passed through roughly 50% to 70% of the value to consumers and farmers because of its simpler and more transparent structure. The debate highlights broader tensions emerging around implementation of the 45Z credit, including disputes over imported feedstocks, carbon accounting methodologies, and how the financial value of the incentive should be distributed across the fuel supply chain. The hearings are also examining broader implementation issues surrounding lifecycle emissions modeling, traceability requirements, registration procedures and eligibility standards tied to the 45Z credit. The outcome is expected to carry major implications for soybean oil demand, renewable diesel profitability, SAF development and future feedstock trade flows. Market participants are closely watching whether Treasury and the IRS ultimately adopt stricter traceability standards or impose limits favoring North American feedstocks in the final guidance later this year.—Fresh U.S. strikes test fragile Iran ceasefireNew American attacks near Bandar Abbas as Washington insists military actions are “defensive” amid increasingly strained peace negotiations The United States carried out fresh military strikes inside Iran, targeting what U.S. officials described as a drone-control facility and Iranian attack drones near the Strait of Hormuz, according to reports. The actions underscore how fragile the current ceasefire arrangement has become even as Washington and Tehran continue indirect negotiations over a broader agreement. The latest strikes reportedly focused on Bandar Abbas, a critical Iranian port city overlooking the Strait of Hormuz, where U.S. forces said Iranian drones posed a threat to commercial shipping and American military assets. U.S. officials characterized the attacks as “defensive” measures designed to preserve the ceasefire rather than escalate the conflict. Iran, meanwhile, accused Washington of violating the truce and warned that further military action could jeopardize negotiations. The renewed military activity came as conflicting reports circulated regarding a possible draft agreement between the two countries. Iranian state-linked media suggested a framework under discussion could reopen the Strait of Hormuz and ease some maritime restrictions within weeks, though the White House publicly denied that any finalized agreement exists. President Donald Trump also pushed back on reports that Iran or Oman would gain any joint management role over the strategic waterway. The market reaction reflected the uncertainty. Oil prices initially fell sharply on hopes of a diplomatic breakthrough but later stabilized as traders weighed the risk that additional military exchanges could disrupt energy flows again. The Strait of Hormuz normally handles roughly one-fifth of global oil and LNG shipments, making even limited clashes in the region highly significant for global energy and inflation expectations. Meanwhile, the broader regional picture remains unsettled. Israeli military operations against Hezbollah in Lebanon have intensified in recent days, and Iranian officials continue insisting that any durable agreement with Washington must also address Israeli actions in Lebanon. That linkage complicates diplomacy because the Trump administration has attempted to separate Hormuz shipping negotiations from wider regional security disputes. For commodity and financial markets, the key question is whether Washington and Tehran can maintain enough stability to gradually restore commercial shipping through Hormuz while continuing negotiations. The repeated pattern of “defensive” U.S. strikes alongside ongoing talks increasingly resembles a managed conflict environment rather than a fully functioning ceasefire.—U.S./Iran deal signals collideMarkets are pricing in progress on U.S./Iran talks even as Washington and Tehran publicly contradict (and fight) each other on whether a framework agreement actually exists Conflicting reports surrounding a possible U.S./Iran agreement are underscoring just how fragile — and politically sensitive — the current negotiations remain. Iranian state television claimed Wednesday that Tehran had obtained a draft framework for a memorandum of understanding with the United States that would eventually reopen the Strait of Hormuz to commercial shipping and lead to a withdrawal of U.S. military forces from Iran’s vicinity. But the White House quickly pushed back, calling reports of a finalized framework a “complete fabrication,” while President Donald Trump stressed that no agreement would move forward unless it met all U.S. demands. The disconnect highlights what increasingly appears to be a two-track negotiation. Publicly, both governments are trying to project leverage and avoid appearing desperate for a deal. Privately, however, there are growing indications that substantive discussions are advancing on at least a limited framework tied to reopening the Strait of Hormuz and reducing military tensions. Reuters previously reported that both sides had narrowed differences over shipping access and de-escalation terms, even while major disputes remained over Iran’s nuclear program and control of Hormuz transit operations. Financial markets are clearly leaning toward the view that negotiations are moving forward. Oil prices plunged more than 5% Wednesday as traders interpreted the latest headlines as evidence that at least partial reopening of Hormuz shipping lanes could eventually occur. Brent crude fell to roughly $94 a barrel while U.S. crude slipped below $89. Still, traders and policymakers alike remain wary after several earlier rounds of negotiations appeared close to success before collapsing over implementation details. Analysts note that even if a political understanding is reached, restoring shipping flows, clearing mines, rebuilding confidence among insurers and tanker operators, and repairing damaged infrastructure could take months. Meanwhile, the conflicting messaging itself may be strategic. Iran likely wants to signal diplomatic momentum to stabilize its economy and calm domestic pressures. The Trump administration, on the other hand, appears determined to avoid creating expectations of concessions before a formal agreement is signed and verified. The result is a negotiation environment where markets are reacting to every headline, but the actual status of a deal remains highly uncertain. For now, the clearest signal may not be the rhetoric from either side, but rather the fact that both Washington and Tehran continue talking despite ongoing military activity and repeated public denials.—Trump Cabinet meeting focuses on Iran, fraud crackdown, energy dominancePresident Donald Trump and senior administration officials used a lengthy Cabinet meeting Wednesday to spotlight negotiations with Iran, aggressive federal anti-fraud efforts, record energy production claims, and a broader economic message centered on tax cuts, deregulation, and manufacturing investment • Iran negotiations and Strait of Hormuz: President Trump repeatedly stressed that Iran “cannot have a nuclear weapon” and said Tehran is seeking a negotiated settlement following recent U.S. military actions and economic pressure. Secretary of State Marco Rubio echoed that diplomacy remains the preferred option, though he emphasized that “other options” remain available if negotiations fail. Trump also rejected the idea of Iran controlling the Strait of Hormuz, calling it “international waters” and stating that “nobody’s going to control it.” The administration framed reopening shipping lanes as a central component of any agreement. Trump said he was “not satisfied” with the latest talks with Iran’s leaders and that he won’t be rushed into a deal because of political pressure at home. “I don’t care about the midterms,” he said. Perspective: The administration is attempting to balance military leverage with diplomacy while signaling that energy markets and maritime trade remain central to negotiations. Trump’s rhetoric suggests the White House wants to project strength while leaving room for a face-saving agreement with Tehran. • Energy dominance and Venezuela: Interior Secretary Doug Burgum highlighted expanded oil and gas lease sales, faster permitting, and increased domestic production, claiming the U.S. is now producing more oil than Russia and Saudi Arabia combined. Rubio described Venezuela as moving through a “stabilization, recovery, and transition” process, noting that Venezuelan oil exports to the U.S. have resumed under Treasury-monitored arrangements. Defense Secretary Pete Hegseth characterized Venezuela as increasingly aligned with U.S. strategic interests. Perspective: The administration is increasingly framing Western Hemisphere energy integration as a geopolitical counterweight to Middle Eastern instability. The renewed Venezuela relationship represents a major shift from prior U.S. sanctions policy and could have significant implications for global crude flows and refinery supply chains. • Federal fraud crackdown: Vice President JD Vance and Acting Attorney General Todd Blanche detailed a sweeping anti-fraud initiative targeting Medicaid, Medicare, housing assistance, student loans, SBA loans, and food assistance programs. Officials claimed hundreds of law enforcement actions and billions in alleged fraudulent payments uncovered. Trump and EPA Administrator Lee Zeldin also referenced the cancellation of billions of dollars in environmental grants approved late in the Biden administration. Perspective: The fraud initiative is becoming a major political pillar for the administration heading into the midterms. The White House is attempting to tie fiscal discipline, anti-corruption messaging, and entitlement protection into a broader populist narrative aimed at working-class voters. • Economic messaging and manufacturing push: Treasury Secretary Scott Bessent argued the economy remains resilient despite Middle East tensions, pointing to strong GDP growth, rising business investment, and manufacturing expansion. SBA Administrator Kelly Loeffler highlighted strong small-business formation and private-sector hiring. •Trump also emphasized tariffs, tax cuts, and trade negotiations with China, saying the U.S./China relationship is now “very profitable business.” Perspective: The administration is increasingly tying tariffs and industrial policy to a broader “America First manufacturing revival” narrative. Officials appear focused on convincing voters that geopolitical disruptions and trade tensions are strengthening — rather than weakening — the U.S. industrial base. • Washington, D.C. revitalization and infrastructure: Trump devoted significant time to discussing restoration projects in Washington, including the Lincoln Memorial Reflecting Pool and Lafayette Park. He portrayed the projects as examples of efficient government spending compared to prior administrations. Perspective: The emphasis on visible infrastructure upgrades in Washington reflects Trump’s longstanding focus on symbolism, aesthetics, and public demonstrations of government competence. The White House clearly sees D.C.’s physical transformation as politically useful ahead of major 250th anniversary celebrations. • Immigration and border security: Trump claimed illegal border crossings had effectively fallen to zero over the past year while Rubio discussed agreements with 20 countries to accept deportees from the United States. Officials also linked immigration enforcement to broader anti-crime and anti-fraud messaging. Perspective: The administration continues to integrate immigration, public safety, and economic themes into a unified political framework. Border security remains central to the White House’s effort to define the contrast with the Democrats ahead of the 2026 elections. —Trade realignment is a potential China purchasing impact Grain industry leaders are focused on how expanded China purchases reshape global trade flows One important reality emerging from discussions surrounding a U.S./China Board of Trade and future tariff reductions is that the grain industry is preparing for freight spread volatility, basis challenges or export competitiveness concerns. This is growing discussion about how expanded Chinese buying could tighten Gulf export capacity and widen interior basis levels, relative tocompetitiveness in non-China export markets. That is not surprising for an industry whose core philosophy has long centered on open-market principles and minimal government interference in commercial grain flows.The first four words of some organization’s mission statements are “promote an open market” — a reflection of the grain trade’s longstanding opposition to government manipulation of pricing, freight structures or destination-specific trade allocation. That distinction matters because it frames the current debate.The focus is on how a potentially large expansion in Chinese purchases could naturally reorder global grain flows and alter competitive positioning among importing countries. That same dynamic largely unfolded during implementation of the Phase One agreement. China’s purchases of U.S. agricultural products surged to roughly $37 billion to $40 billion annually, while some trade flows to other destinations — particularly Canada and Mexico in certain categories — softened relative to prior trends. Yet the market ultimately absorbed those shifts because global commodity prices rose sharply amid supply disruptions, pandemic-era logistics problems and eventually the Russia/Ukraine war, and the Covid pandemic also resulted in major market impacts. Higher prices effectively masked many of the trade-displacement concerns. The difference now is that global markets may not offer the same inflationary backdrop that existed during the 2021-2022 period. Brazil has significantly expanded export infrastructure and market share, Russian wheat remains aggressively priced into world channels and global buyers have become more diversified in sourcing strategies. As a result, future Chinese demand growth may create more visible competitiveness pressure for U.S. exports without necessarily triggering the same magnitude of broad-based commodity inflation. Even so, the prevailing view among grain merchants still appears to be that markets should determine how those trade flows adjust. If China buys more U.S. grain and oilseeds following tariff reductions, then exporters expect the market to ration demand through basis, spreads, freight economics and price discovery, much as it did during earlier trade cycles. Some destinations may source more heavily from South America or the Black Sea region while China absorbs a larger share of U.S. supplies. That may create volatility and shifting trade relationships, but it remains fundamentally consistent with how the grain industry believes global markets should function. In that sense, the larger issue surrounding the proposed Board of Trade may be whether Washington and Beijing can structure a managed-trade framework that expands bilateral commerce without excessively distorting broader global agricultural trade patterns. Many of the same concerns being discussed now were also present during implementation of the Phase One trade agreement between the U.S. and China. At the time, grain traders, exporters and some foreign buyers worried that China’s large-scale managed purchases of U.S. agricultural products would effectively redirect supplies away from traditional customers such as Mexico, Canada, Japan, South Korea and Southeast Asian importers. There were also concerns that concentrated Chinese buying would distort export flows, elevate Gulf premiums and widen interior basis levels. To a meaningful degree, that is exactly what happened. China rapidly re-emerged as the dominant growth engine for U.S. agricultural exports following the Phase One agreement signed in early 2020. U.S. farm exports to China eventually surged into roughly the $37 billion to $40 billion range annually, driven primarily by soybeans, corn, sorghum, pork, beef and cotton purchases. Meanwhile, export totals to some other major customers — particularly Canada and Mexico in certain product categories — softened relative to prior trends as China absorbed a larger share of exportable U.S. supplies. However, the broader outcome for U.S. agriculture proved more positive than many initially feared because global market conditions shifted dramatically during the same period. First came pandemic-related supply chain disruptions and aggressive Chinese rebuilding of feed inventories following African swine fever losses. Then came weather-related production concerns in multiple exporting regions. Finally, Russia’s invasion of Ukraine in 2022 fundamentally altered global grain and oilseed trade flows, creating widespread supply anxiety across wheat, corn, vegetable oils and fertilizer markets. Those combined developments pushed global commodity prices sharply higher. As a result, even though some trade flows became more concentrated toward China, the total value of U.S. agricultural exports rose substantially because prices increased across much of the commodity complex. Higher futures values, elevated basis levels and stronger export premiums offset concerns about losing some non-China market share. In effect, the market became large enough and tight enough that the U.S. agricultural sector could support stronger Chinese demand without suffering major aggregate export revenue losses elsewhere. That historical experience is important for understanding the current debate around a possible Board of Trade framework and future tariff reductions with China. Many analysts now believe the administration may be betting on a similar outcome: that expanded Chinese demand would support overall commodity prices enough to outweigh potential displacement effects in other export markets. But conditions today are not identical to the Phase One period. Global grain inventories outside China are generally more comfortable than during the peak Ukraine supply panic, Brazil has dramatically expanded export capacity and world buyers have become more accustomed to diversifying away from U.S.-centric supply chains. Russian wheat exports also remain structurally dominant in many importing regions because of aggressive pricing and freight advantages. That means any future surge in Chinese purchases of U.S. farm products could produce sharper competition for export capacity and potentially wider Gulf premiums without necessarily triggering the same magnitude of global price inflation seen during 2021-2022. Meanwhile, freight spreads are already historically important in determining competitiveness. If China receives lower tariffs on U.S. products while aggressively rebuilding inventories or expanding purchases under a managed-trade structure, non-China buyers could once again face higher U.S. basis levels and elevated delivered costs. Still, the Phase One experience demonstrated another important point for Washington policymakers: even when some traditional export relationships weaken temporarily, higher overall commodity prices and tighter global supply balances can still leave the U.S. farm economy financially better off in aggregate terms. That reality is likely influencing current administration thinking as discussions surrounding tariff reductions and a potential U.S./China Board of Trade continue to evolve. —USTR nears public comment launch on U.S./China Board of TradeGreer says Federal Register notice on potential tariff reductions for Chinese goods is coming “shortly” as the administration advances a managed-trade framework with BeijingU.S. Trade Representative (USTR) Jamieson Greer said this week that the Trump administration will issue a Federal Register notice “shortly” seeking public comments on which Chinese goods should qualify for lower tariffs under the proposed U.S./China “Board of Trade.” However, he did not provide a specific release date. Greer said he has personally reviewed and edited the notice, and indicated the process will begin with a broad solicitation of input from U.S. companies and the public regarding which “non-strategic” goods should be considered for reciprocal tariff reductions. The Board of Trade concept emerged from the May Trump-Xi summit in Beijing and is designed to initially cover roughly $30 billion in non-sensitive commercial trade where both countries could lower or eliminate tariffs. Based on how USTR has handled other recent trade-related public comment processes this year, the notice will likely appear in the Federal Register within days rather than weeks. Once published, it would typically open a formal comment window — often 15 to 30 days — before the administration determines which tariff lines or product categories are eligible for relief. Greer also suggested the process will be tied closely to ongoing negotiations with Beijing, saying the administration has shifted toward a “managed trade” framework with China rather than expecting broad structural reforms from Beijing’s economic model.—U.S., Mexico launch USMCA review talksAgriculture, rules of origin and economic security set to dominate coming negotiation rounds The United States and Mexico on Wednesday formally launched the first bilateral negotiating round tied to the initial review of the U.S.-Mexico-Canada Agreement (USMCA), signaling that the Trump administration is accelerating efforts to reshape portions of the North American trade pact ahead of the broader 2026 review process. According to USTR, Deputy U.S. Trade Representative Jeff Goettman is leading the U.S. delegation in Mexico City for talks centered on economic security and rules-of-origin requirements for key industrial goods. The discussions mark the opening phase of what is expected to become an intensive series of negotiations covering agriculture, manufacturing, labor, supply chains and broader competitiveness concerns across North America. USTR also announced two additional negotiating rounds — June 16-17 in Washington and another during the week of July 20 in Mexico City. The Washington session is expected to focus heavily on agriculture and “level playing field” issues, language that typically encompasses market access disputes, sanitary and phytosanitary standards, labor enforcement and concerns surrounding subsidies or non-tariff barriers. The administration emphasized the talks are aimed at ensuring the USMCA delivers stronger benefits for U.S. manufacturers, farmers, ranchers, workers and service suppliers, while also supporting small- and medium-sized businesses. For agriculture, the review process is likely to reopen several longstanding disputes between the U.S. and Mexico, including biotech corn policies, pesticide-related measures, dairy trade frictions and questions surrounding Mexico’s interpretation of certain import taxes and regulations affecting U.S. agricultural inputs and feed products. Mexico’s Economy Ministry confirmed the new negotiation schedule and said Economy Secretary Marcelo Ebrard is leading the Mexican delegation. Mexican officials also highlighted the political significance of the talks, noting the U.S. delegation includes bipartisan members of the House Ways and Means Committee along with roughly 60 business leaders representing multiple sectors. The launch of the negotiations underscores how the USMCA review is increasingly becoming a broader strategic exercise tied not only to trade flows, but also to supply-chain security, industrial policy and North American competitiveness relative to China. |
| FINANCIAL MARKETS |
—Equities today: Asian equity markets mostly fell as a pullback in technology and AI-related shares weighed on regional sentiment. Investors also monitored developments in the Middle East following reports of fresh U.S. strikes on Iran as the two countries remained at odds over key issues in peace negotiations.
Quarterly earnings reports today include American Eagle Outfitters, Autodesk, Best Buy, Burlington Stores, Canadian Imperial Bank of Commerce, Costco Wholesale, Dell Technologies, Dollar Tree, Gap, Hormel Foods, MongoDB, NetApp, Okta, Royal Bank of Canada, Toronto-Dominion Bank, and UiPath.
—Dollar climbs on Iran strike escalation, rate fears
Fresh U.S. military action against Iran and persistent inflation concerns push the dollar index toward seven-week highs ahead of key PCE data
The dollar index climbed above 99.3 on Thursday, moving toward its highest level in nearly seven weeks after reports of fresh U.S. strikes on an Iranian military facility heightened geopolitical tensions and reinforced concerns about inflation and higher interest rates. The renewed conflict added uncertainty to ongoing negotiations between Washington and Tehran, particularly as disputes remain over Iran’s nuclear program and control of shipping through the Strait of Hormuz.
—Equities yesterday:
| Equity Index | Closing Price May 27 | Point Difference from May 26 | % Difference from May 26 |
| Dow | 50,644.28 | +182.60 | +0.36% |
| Nasdaq | 26,674.73 | +18.55 | +0.07% |
| S&P 500 | 7,520.36 | +1.24 | +0.02% |
—PCE inflation seen rising again ahead of June Fed meeting
Economists expect another firm inflation reading in April, reinforcing expectations that the Federal Reserve will keep interest rates unchanged while remaining wary of renewed price pressures
The Federal Reserve’s preferred inflation gauge is expected to show another notable increase in price pressures when the April personal consumption expenditures (PCE) index is released this morning (8 :30 a.m. ET, May 28), underscoring the difficult inflation backdrop facing policymakers ahead of the June 16-17 Federal Open Market Committee meeting.
Economists surveyed by FactSet expect headline PCE inflation to rise 0.5% in April from the prior month, lifting the annual inflation rate to 3.9% from 3.5% in March. If realized, that would mark the highest year-over-year reading since May 2023 and signal that inflation remains well above the Fed’s long-term 2% target.
Energy costs, particularly gasoline prices, are expected to account for much of the monthly increase after fuel prices surged during April amid heightened geopolitical tensions and tighter global oil markets. Those same energy pressures also drove stronger consumer price index and producer price index readings earlier this month.
But, some categories that feed into the PCE calculation — including medical care services and portfolio management fees — appeared more subdued in recent inflation data, leading some economists to believe the overall report may not be as severe as headline expectations suggest.
Core PCE inflation, which excludes food and energy prices and is closely watched by Federal Reserve officials, is expected to rise 0.3% in April and 3.3% from a year earlier, compared to 3.2% annual growth in March. Even that modest acceleration would likely reinforce concerns among policymakers that inflation progress has stalled.
The anticipated strength in both headline and core inflation is expected to solidify expectations that the Fed will leave the federal funds rate unchanged at 3.5% to 3.75% at next month’s policy meeting. Policymakers will also receive another key inflation report — the May CPI release — shortly before the June gathering.
Of note: Fed Chair Kevin Warsh has at times emphasized the Dallas Fed’s trimmed mean PCE inflation measure, which filters out extreme price movements and has recently tracked below both headline PCE and CPI readings. However, reliance on that measure may face skepticism within the broader committee because trimmed mean inflation failed to fully capture the rapid acceleration in prices during 2021.
Fed Governor Christopher Waller, who earlier this year supported a rate cut, recently acknowledged that “inflation is not headed in the right direction,” while also suggesting that the Fed’s next policy statement should indicate that additional easing is no more likely than a future rate increase.
Upshot: A stronger-than-expected PCE report would likely reinforce that message and further dampen expectations for near-term interest rate cuts.
—Kashkari signals Fed still focused on inflation risks
Minneapolis Fed President says labor market remains solid, while rising energy and fertilizer costs threaten broader price pressures and could force more aggressive Fed action
Neel Kashkari said the Federal Reserve remains primarily focused on bringing inflation back under control, arguing that the U.S. labor market is still strong enough to allow policymakers to prioritize price stability.
Speaking at the Bank of Japan-IMES Conference in comments reported by CNBC and Reuters, Kashkari said inflation has remained above the Fed’s 2% target for more than five years and warned that policymakers cannot risk allowing inflation expectations to become “unanchored.” He said the labor market is currently in “decent shape,” giving the Fed room to maintain pressure on inflation rather than pivoting toward growth concerns.
Kashkari cautioned that if consumers and businesses begin to expect persistently higher inflation, the Fed could ultimately be forced to respond with even more aggressive monetary tightening. His remarks reinforce the increasingly hawkish tone emerging from several Fed officials as inflation pressures tied to energy markets and global supply disruptions continue to intensify.
The Minneapolis Fed president specifically pointed to rising energy and fertilizer costs as key drivers behind the latest inflation surge, noting that those costs eventually filter through to broader parts of the economy. The comments come as oil and fuel markets remain volatile amid ongoing tensions involving Iran and disruptions surrounding the Strait of Hormuz, a critical global energy shipping route.
Kashkari also linked the current inflation environment to a series of overlapping global shocks, including the Covid-19 pandemic, tariffs, the war in Ukraine, and now the Middle East conflict. His comments suggest Fed officials remain concerned that geopolitical events could prolong inflationary pressures even if domestic demand begins to moderate.
On monetary policy, Kashkari reiterated that the Fed continues to pursue a “balanced approach” to its dual mandate of stable prices and maximum employment, but emphasized that inflation currently represents the greater risk to the economy.
Meanwhile, Kashkari said artificial intelligence could eventually support higher long-term productivity growth and potentially sustain higher interest rates if the economy becomes structurally more productive. However, he cautioned that the near-term implications of AI for inflation and monetary policy remain uncertain and will require more time to assess.
| AGRIBUSINESS |
—Bayer faces antitrust lawsuit over corn seed market dominance
Iowa-based seed company Latham Quality alleges Bayer used anti-competitive tactics to preserve control of the U.S. genetically engineered corn seed market, intensifying scrutiny of consolidation in the agricultural input sector
A new federal lawsuit against Bayer is adding to mounting legal pressure on the company, alleging the agribusiness giant used illegal and anti-competitive practices to monopolize the U.S. market for genetically engineered corn seeds tied to its widely used Roundup herbicide system.
The lawsuit, filed by Iowa-based Latham Quality, a family-owned independent seed company, claims Bayer leveraged its dominance over the NK603 corn trait — a genetically engineered trait that provides resistance to glyphosate herbicides such as Roundup — to suppress competition and maintain monopoly pricing power even after patent protections expired in 2022.
According to the complaint, Bayer prevented independent seed companies from developing generic alternatives to NK603 by restricting access to key genetic seed material and continuing to impose royalty payments and licensing fees. The suit alleges Bayer pressured smaller companies to remain “100% loyal” while retaliating against firms attempting to develop competing products.
Latham alleges Bayer sales representatives used confidential business information to undermine the company’s customer base after it pursued competing seed development efforts, pushing the company toward financial distress. The lawsuit seeks class-action status and treble damages, arguing Bayer extracted “hundreds of millions, if not billions,” in excessive profits through its market control.
The case shines a spotlight on growing concerns over consolidation in the U.S. seed industry at a time when farmers are already grappling with elevated input costs, including seeds, fertilizer and fuel, amid several years of declining farm margins. The complaint notes that nearly all genetically engineered hybrid corn sold in the U.S. contains the NK603 trait, while government estimates show roughly 92% of U.S. corn acres are planted with herbicide-tolerant seed varieties.
The lawsuit also arrives as the Trump administration signals increased scrutiny of competition issues across agricultural supply chains. The Department of Justice recently said Bayer agreed to remove potentially anti-competitive provisions from a loyalty program tied to independent seed companies licensing Bayer technology.
Bayer rejected the allegations, saying the company competes fairly and remains compliant with applicable laws. The company argued that the crop input and corn seed markets remain “competitive, fair and diverse.”
Meanwhile, the lawsuit adds to Bayer’s broader legal troubles stemming from thousands of claims alleging Roundup causes cancer — litigation that has already cost the company billions of dollars since its 2018 acquisition of Monsanto.
The case could become another major flashpoint in the ongoing debate over concentration and market power in the agricultural input sector, particularly as lawmakers and regulators increasingly focus on the dominance of multinational firms in seeds, chemicals and fertilizer markets.
| AG ECONOMY |
—Land O’Lakes CEO warns of deepening farm crisis
Wall Street Journal interview highlights rising farm bankruptcies, labor shortages and growing pressure on rural America as producers struggle with weak profitability and mounting financial stress
In an interview with the Wall Street Journal (link), Land O’Lakes CEO Beth Ford warned that the U.S. agricultural sector is facing mounting economic and structural pressures, arguing that policymakers and the broader public underestimate the fragility of the nation’s food system. Ford said farm bankruptcies have doubled over the past year, median farm income is declining, and roughly 90% of family-owned farms and ranches now rely on off-farm income to survive.
Ford, who leads one of the few Fortune 500 cooperatives and oversees a network through which roughly half of U.S. harvested acres flow, said fewer than 5% of farms are profitable despite some large operations continuing to perform well. She has pushed for immigration reform, a new farm bill and additional infrastructure investment, framing agriculture as a sector contributing more than $1.5 trillion annually to the U.S. economy.
The Wall Street Journal profile detailed Ford’s argument that labor availability remains one of the industry’s most urgent challenges. She noted that roughly two-thirds of U.S. agricultural workers are noncitizen immigrants and said many farm jobs go unfilled because domestic workers often do not apply for them. Ford warned that labor disruptions, including immigration enforcement actions, can quickly destabilize farm operations, particularly in labor-intensive sectors such as dairy and produce.
Ford also emphasized the emotional and financial strain facing producers, saying many farmers fear losing multigenerational operations amid tightening operating credit and weak margins. She described farming not simply as a business, but as a deeply personal way of life tied to family legacy and rural communities.
Meanwhile, Ford said food insecurity in rural America and underinvestment in agricultural communities remain underappreciated national issues. She argued that stabilizing the farm economy requires broader recognition of agriculture’s role in economic security, labor markets and the U.S. food supply chain.
| AG MARKETS |
—Australia braces for new China beef tariff
Bloomberg reports Australia’s beef industry expects China’s new import quota system to trigger a 55% tariff within weeks, but producers believe surging demand from the U.S. and Southeast Asia will cushion the blow
Australia’s red meat sector is preparing for a potential 55% Chinese tariff on beef imports as early as mid-June after Beijing warned Canberra was nearing its annual shipment quota, according to Bloomberg. China’s new safeguard system, introduced late last year to protect domestic livestock producers, caps Australian beef exports at 205,000 metric tons before the punitive tariff takes effect. Industry analysts told Bloomberg that Australia is on pace to hit that threshold within weeks.
Despite the looming trade barrier, Australian beef exporters remain relatively confident because of strong global demand and a broad customer base outside China. Andrew Cox of Meat & Livestock Australia said the industry is “not completely reliant” on China, noting that Australia maintains a diversified export portfolio.
Australia’s beef sector has started 2026 at a record pace, producing more than 730,000 metric tons in the first quarter, up 8% from a year earlier. The U.S. remains Australia’s largest export destination, accounting for 29% of overseas sales during the first three months of the year, while China represented 21%. Japan and South Korea combined accounted for another 32%.
Demand from the U.S. has been particularly strong as the American cattle herd sits at multi-decade lows. Analysts also noted that China’s recent reopening to hundreds of U.S. beef plants following President Donald Trump’s visit to Beijing could indirectly create additional opportunities for Australian exporters by tightening U.S. domestic beef supplies.
Some analysts believe Australian beef would likely continue flowing into China even after the tariff is imposed, though at lower volumes. He added that exporters are already expected to redirect more product into Southeast Asia and the U.S. market, where grain-fed beef demand remains robust.
Meanwhile, Australian officials continue lobbying Beijing to relax or expand the quota system. Trade Minister Don Farrell raised objections during meetings with Chinese Commerce Minister Wang Wentao last week, though there has been no indication China plans to ease restrictions. Industry officials acknowledged considerable uncertainty remains because this is the first year the quota mechanism has been implemented.
—Brazilian corn exports surge in May as second crop boosts global competitiveness
Shipments through the third week of May already exceed last year’s monthly total by more than fivefold, despite sharply lower prices
Brazilian corn exports accelerated sharply in May, underscoring the country’s growing competitiveness in global feed grain markets as its large second-crop harvest moves toward export channels. Data from Brazil’s Foreign Trade Secretariat (Secex) showed the country exported 201,735.3 metric tons of corn through the third week of May, already more than five times the 38,928.1 tons shipped during all of May 2025.
The surge reflects expanding supplies from Brazil’s safrinha, or second corn crop, alongside firm international demand from buyers seeking competitively priced grain. The stronger export pace also highlights Brazil’s increasing role in global corn trade flows at a time when world supplies are expanding and importers are looking for alternatives to higher-priced origins.
Average daily shipments reached 13,449 tons during the first 15 business days of May, up 625.5% from the 1,853.7 tons per day recorded during the same month last year. The export acceleration comes as harvest activity advances across key producing regions, improving domestic grain availability and increasing logistical movement through Brazilian ports.
Meanwhile, export prices weakened sharply. The average price for Brazilian corn exports fell 42.9% year over year to $266.60 per ton in May, compared to $467.10 per ton during the same period last year. The decline mirrors broader pressure on global corn prices amid larger expected supplies from South America and ongoing competition in export markets. Even with lower prices, higher shipment volumes lifted overall export earnings. Daily average export revenue climbed to $3.585 million through the third week of May, up 314.1% from $865,800 during the same period last year.
Total corn export revenue for May had already reached $53.775 million through the third week of the month, well above the $18.182 million generated during all of May 2025.
Market participants expect Brazilian corn exports to continue strengthening in the weeks ahead as additional second-crop supplies enter the pipeline and international demand for competitively priced feed grains remains firm.
—Agriculture markets yesterday:
| Commodity | Contract Month | Closing Price May 27 | Change from May 26 |
| Corn | July | $4.52 1/2 | -5 cents |
| Soybeans | July | $11.85 1/4 | -3/4 cent |
| Soybean Meal | July | $330.60 | +$2.00 |
| Soybean Oil | July | 75.26 cents | +90 points |
| Wheat (SRW) | July | $6.22 1/2 | -13 cents |
| Wheat (HRW) | July | $6.69 3/4 | -6 1/2 cents |
| Spring Wheat | September | $7.05 1/4 | -9 cents |
| Cotton | July | 76.16 cents | -121 points |
| Live Cattle | June | $251.425 | +$3.20 |
| Feeder Cattle | August | $354.625 | +$5.175 |
| Lean Hogs | June | $97.60 | +$1.475 |
Source: Market closing data, May 27, 2026
| FARM POLICY |
—FSA opens review period for new ARC/PLC base acre allocations
Landowners can begin reviewing updated base acre summaries June 1 as USDA prepares to implement expanded commodity program coverage under the OBBBA
USDA’s Farm Service Agency (FSA) announced that landowners will be able to review updated base acre allocations for the Agriculture Risk Coverage and Price Loss Coverage programs beginning June 1, 2026, following enactment of the One Big Beautiful Bill Act (OBBBA) last year.
The law, formally known as the Working Families Tax Cuts Act, authorized the addition of up to 30 million new base acres nationwide ahead of ARC and PLC enrollment for the 2026 crop year and beyond. The expanded allocation is expected to significantly reshape commodity program participation across multiple regions and crops.
Under the programs, ARC provides payments when actual farm revenue falls below a historical benchmark guarantee, while PLC issues payments when market prices for covered commodities fall below statutory reference prices. Both programs are administered by the Farm Service Agency.
Eligible producers include those with an interest in covered commodities grown on farms with base acres.
USDA said landowners will have from June 1 through Aug. 31, 2026, to review their Base Allocation Summary. Producers with Login.gov accounts can access the information online, while others may obtain summaries through local FSA offices beginning June 1.
The enrollment period for the 2026 ARC and PLC programs has not yet been announced.
—SNAP cuts become central hurdle in Senate farm bill talks
Democrats push to delay food aid cost shifts as Republicans resist reopening major changes enacted under last year’s tax-and-spending law
Changes to the Supplemental Nutrition Assistance Program (SNAP) are emerging as one of the biggest obstacles in Senate negotiations over the long-delayed farm bill, as lawmakers struggle to bridge sharp partisan divides over food assistance and farm spending.
At the center of the dispute are more than $187 billion in SNAP reductions enacted last year under Republicans’ tax-and-spending law, formally known as the One Big Beautiful Bill Act (OBBBA). Senate Democrats are pushing for a two-year delay in the new state cost-sharing requirements tied to SNAP administration, arguing states need more time to lower payment error rates before taking on additional financial burdens.
Republicans, however, are signaling little appetite for reopening the SNAP provisions. Senate Ag Committee Chair John Boozman (R-Ark.) said the food aid changes are likely settled, even as negotiations continue on the broader farm bill package. “I think the SNAP program is pretty much set right now,” Boozman said, while emphasizing the legislation would still provide significant support for the farm economy.
The dispute underscores the difficult political balancing act facing lawmakers as they attempt to complete a new five-year farm bill before the 2026 midterm elections. Congress has relied on temporary extensions since the previous farm bill expired in 2023. The House passed its version of the legislation last month, boosting farm safety-net spending while significantly reducing food assistance spending, drawing near-unified Democratic opposition.
Senate Democrats continue to frame SNAP protections as a non-negotiable issue. Sen. Cory Booker (D-N.J.) called restoring SNAP benefits a “big red line,” though he also suggested negotiations with Boozman remain constructive.
Meanwhile, the debate is increasingly focusing on the impact the new SNAP rules could have on state budgets. Beginning in 2028, states with SNAP payment error rates above 6% will be required to absorb a portion of program benefit costs. USDA data show the average state error rate currently stands at 10.9%, meaning most states could face significant financial exposure unless they rapidly improve administrative accuracy.
Details: FY 2027 is when the separate SNAP administrative cost-sharing change begins. The federal administrative reimbursement rate drops from 50% to 25%, increasing state responsibility for administrative costs. FY 2028 is when states begin paying a share of actual SNAP benefit costs if their error rates exceed 6%. States can use either their FY 2025 or FY 2026 error rate to determine their FY 2028 liability. Some states with exceptionally high error rates can delay implementation until FY2029 or FY 2030 under the Alaska carveout provision.
Some Republicans have indicated openness to limited adjustments. Sen. Joni Ernst (R-Iowa) said she could support a two-year implementation delay if Democrats are willing to compromise elsewhere in the farm bill negotiations. Iowa’s own SNAP error rate stood at 6.14% in fiscal 2024, narrowly above the new threshold.
Democrats argue resolving the SNAP issue may be essential to moving the broader legislation. Sen. Adam Schiff (D-Calif.) said corrective action on SNAP would likely be necessary for any farm bill to pass the Senate.
The standoff highlights the growing challenge of holding together the traditional urban-rural coalition that has historically supported farm bills, with nutrition assistance now emerging as one of the defining fault lines in the negotiations.
| ENERGY MARKETS & POLICY |
—Thursday: Oil rebounds after fresh U.S. strikes on Iran
Renewed military action near the Strait of Hormuz revives supply fears after markets had briefly priced in hopes for a U.S./Iran deal
Oil prices climbed roughly 2% early Thursday after Reuters reported fresh overnight U.S. strikes on an Iranian military site, reigniting concerns about escalating tensions in the Middle East even as Washington and Tehran continue negotiations aimed at ending their three-month conflict.
Brent crude futures rose $1.90 or nearly 2%, to $96 per barrel, while the more active August Brent contract gained $2.05 to $94.30. U.S. West Texas Intermediate crude futures advanced $1.80, or 2%, to $90.50.
The rebound followed a sharp selloff Wednesday, when both Brent and WTI tumbled more than 5% to their lowest levels in over a month after reports suggested the U.S. and Iran were making progress toward a potential agreement that could eventually reopen the Strait of Hormuz and normalize commercial shipping flows.
Reuters reported that the U.S. military launched new strikes targeting an Iranian military site believed to pose a threat to U.S. forces and maritime traffic moving through the strategic chokepoint. The strikes underscored the fragile nature of ongoing ceasefire and diplomatic discussions and reminded traders that the risk of supply disruptions remains elevated.
Analysts said the market remains highly sensitive to any developments involving the Strait of Hormuz, which normally handles roughly 20% of global oil and LNG flows. ANZ commodity strategist Daniel Hynes said oil supplies remain constrained and warned that key issues between Washington and Tehran remain unresolved.
Meanwhile, supply fundamentals in the U.S. also provided support to prices. American Petroleum Institute data showed U.S. crude inventories fell by 2.8 million barrels last week, marking the sixth consecutive weekly decline in stockpiles. Traders are now awaiting official inventory figures from the U.S. Energy Information Administration, which were delayed one day because of the Memorial Day holiday.
—Wednesday: Oil slides on Iran deal hopes
Crude futures tumble to five-week lows as markets weigh potential U.S.-Iran framework and eventual reopening of Hormuz shipping lanes
Oil prices fell sharply Wednesday, with both U.S. and global crude benchmarks closing at their lowest levels in more than a month as traders reacted to signs of possible progress in negotiations between the United States and Iran.
U.S. West Texas Intermediate crude futures dropped 5.5% to $88.68 per barrel, while Brent crude fell 5.3% to $94.29 per barrel. Both benchmarks posted their weakest closes since April 17 as markets increasingly priced in the possibility of reduced geopolitical risk in the Middle East.
The selloff accelerated after Iran’s state broadcaster reported that negotiators had circulated a draft framework agreement with the United States. According to the report, the framework could restore commercial shipping activity to near prewar levels within a month if finalized. Trump administration officials disputed the account.
Meanwhile, traders viewed the report as an early sign that tensions surrounding the Strait of Hormuz may eventually ease. The waterway remains one of the world’s most critical energy chokepoints, normally handling roughly 20% of global oil and liquefied natural gas flows.
Despite the optimism, analysts cautioned that no final agreement has been reached and actual shipping traffic through Hormuz remains constrained. In fact, vessel movements through the strait reportedly slowed further in recent days as insurers, shipping companies and energy traders continue to assess security risks tied to the ongoing conflict.
The sharp decline in crude prices also eased some immediate inflation concerns that had been building across global markets in recent weeks as the Middle East conflict pushed fuel prices higher and complicated the outlook for central banks, including the Federal Reserve.
| WEATHER |
— NWS outlook: Widespread showers and thunderstorms to persist across the Southern U.S. through the end of the week… …A Pacific low maintains unsettled conditions and isolated severe weather across the Northwest… …Summerlike heat continues over the northern tier while unseasonably cool conditions linger out West.
