Energy Shock Ahead of WASDE Report Sends Commodity Markets into Turmoil

The commodity markets are experiencing volatility ahead of Friday's WASDE report, driven by escalating tensions between the U.S. and Iran in the Strait of Hormuz.

Diesel prices have hit record highs, while Brent crude and West Texas Intermediate pushed towards $100-a-barrel, with oil shut-ins and production disruptions climbing to 6.7 million barrels a day in August, up from just under 5 million barrels a day in July.

This energy move is having an impact on grains, with managed money funds playing catch-up across the corn, soybean, and wheat complex, which are all trading at three-plus-year highs.

The early start to harvest across the Corn Belt is also causing yield questions, with combines already running in some areas. Producers are contending with disease pressure and heat stress, leading to test weight and kernel fill issues that may not be fully reflected in USDA's data until closer to October or November.