Oil challenges 120 overnight before tumbling back to near 100.

All eyes were on oil prices on Sunday evening as prices exploded through $100 level and climbed into the evening, tagging just shy of 120 before midnight. It was around that time when the G-7 leaders convened a phone meeting where they would work on combined Strategic Reserve Releases to help alleviate the pinch of the Straits of Hormuz inactivity getting oil out of the Persian Gulf. Saudi Arabia also redirected roughly 1.8 Mil barrels of crude oil production to their pipeline across the desert to the Red Sea.

In last 20 years, the all-time high for oil was in 2008 at just under 148, while in 2022 the Russian/Ukrainian war start had seen oil spiked 130.50. It’s plausible that last night’s high just under 120 will be the high watermark for this event. The break in oil prices back to near 100 and the morning hours is contingent upon the G-7 following through on releases of SPR's and the Persian Gulf being reopened to the world back through the Strait of Hormuz.

Because of the importance of the region for the amount of fertilizer that needs to be flowing again, and its importance on world grain production is why grain values reacted so violently overnight again. With wheat values peaking just under 650, spot May corn at 476, and May soybeans at 1233.6, those values now become benchmark numbers. Old crop supplies run the risk of demand destruction to the Middle East, while the fertilizer issue is a longer-term new crop issue.

There is betting markets called Polymarkets that are new and are under scrutiny currently of the SEC, but these markets have a decent track record on making bets. Currently there is only 1 and 3 chance the war will end in March, 2 in 3 chance it will be over in April and then a 75% chance it’s done by June 30. The most important part of these betting markets not so much about the war, is about the Strait of Hormuz being reopened to get oil, fertilizer, and grain moving. That supply movement again in the Strait of on those is what needs to happen in the next two weeks.

Today’s day session will have its violent prices watching the rise and fall of crude oil. G-7 leadership on coordinated releases of their Strategic Reserves will be monitored for its short-term effect, which will be considered successful if presidents Trump plan to instigate movement into the Strait of Hormuz via naval escorts, and insurance backing. Still the fear is that a large ship would be sunk by a successful attack overrode Iranian military group, which is what Iran’s military is now. A be headed leadership with massive tentacles scurrying about doing their own thing without listing to any form of leadership. That is the crux of the problem.

Cattle futures will be sharply lower this morning, as not only is there the fear of consumer demand for beef being softened due to the inflationary effect of energy values currently, there is the redevelopment of a strike being announced for the JBS packing plant in Greeley Colorado. The clock starts today with the notice of intent, with the actual strike, starting March 16. The question is can JBS have enough management staff and bring in backup workers to keep the plant from going dark.

Cash values were lower last week as the Southern live trade took place at $240-241 which was off $4 on the week while live sales in the north were off $2at $242. The feeder index ended last week at $367.32 which was off near $5.50 on the week.

April live cattle has downside targets of $226.00-228.50, with April feeder cattle having initial targets of last week’s low at 345.60 being under attack and chart values at 340. 340 is just out of reach for feeder cattle today as it would be more than the 9.25 limit. Weakness looks to start the day, and then all eyes will be on oil and the stock market.