Porto Alegre, 2th April, 2026 – Another week filled with a large amount of information for global commodities. The development of the war, in our view, will take longer than expected, given the lack of agreements and the escalation of actions involving Iran and twelve countries in the Middle East. While Saudi Arabia accelerates oil flows through pipelines, Ukraine attacks one of the largest refineries in Russia, in an environment where the Strait of Hormuz remains closed and or only open to certain countries such as the BRICS. Oil breaks above the US$ 100 per barrel level in NY, while more pessimistic views point to much higher prices, possibly exceeding pandemic levels. In the midst of this uncertain and imprecise environment, the US government redefines the path of biofuels for 2026 and 2027, meeting sector demands with expanded mandates for biodiesel and ethanol, while keeping imports open and without imposing rules for domestic producers. The government supports agribusiness without neglecting energy supply. The impacts, however, have been somewhat neutral for corn and soybean prices, even with the strong potential addition of demand via E15 in several states. For South America, stronger domestic demand in the US implies less competition with the main corn exporter. At this point, the week focuses on two major themes, the unfolding of the war and US planting intentions. Important variables for corn.
Discussions and attempts at ceasefire continue to create room for further tensions and no solution. Iran did not accept the US proposal involving 15 requested items. Even so, the US continues to delay a more aggressive action, possibly definitive, still believing in a less traumatic solution. Meanwhile, bombings continue both from Israel and Iran across neighboring countries. Attacks on the energy sector and the continued closure of the Strait of Hormuz do not indicate a short term resolution.
At the same time, an older war shows increasing escalation. Ukraine is now bombing Russian energy infrastructure, including one of the country’s largest refineries. Russia has been seen as one of the options for global supply of oil, derivatives and fertilizers, without even touching the sensitive issue of wheat. This war, however, seems likely to continue beyond the Iran conflict.
Within this global supply and price shock environment, commodities continue to reflect volatility driven by oil prices. The week begins with oil breaking above US$ 100 per barrel in NY due to worsening conditions and lack of clear solutions. The inflationary impact for the US is evident and should appear in domestic indicators in April referring to March. Under this scenario, bond yields rise and reinforce the strength of the dollar.
The Dollar Index in NY once again tried to break above the 100.3 level, indicating a stronger dollar against other currencies. Given this context, the next Federal Reserve meeting on April 29 should not consider rate cuts, but rather maintenance or, depending on worsening conditions, even rate increases.
However, this situation does not seem to affect Brazilian institutions. With rising US bond yields, Brazil’s interest rate arbitrage dropped from 5 to 4 percent, indicating reduced attractiveness for foreign capital. Even so, domestic institutions continue supporting the government and preventing further depreciation of the real, despite elevated risk for emerging markets. The next Copom meeting is scheduled for April 29. The Copom minutes did not suggest another Selic rate cut at this meeting. Additional cuts, given internal and external inflation risks, could strongly impact the exchange rate. As government revenues decline despite very high taxation and public debt continues to expand, expecting falling interest rates alongside a stronger currency becomes unrealistic.
In an environment of rising oil prices, inflation risk and potential rate increases, the US government updated biofuel production targets, specifically ethanol and biodiesel, for 2026 and 2027. New rules will only be evaluated for regulations starting in 2028. The decisions were very favorable for domestic energy producers and for future demand of corn and soybeans. The only unexpected point is that the government did not impose restrictions on imported feedstocks, resulting in a neutral impact for some segments such as soybean oil.
The wars in Iran and Ukraine continue to affect commodity markets. The main impact remains on oil. In its derivatives, Baltic urea reached an average of US$ 690 per ton during the week. The global increase in urea and ammonia prices will raise costs for producers and crops starting planting worldwide, including in the US, Europe, Ukraine and China. Higher costs could restrict planted area such as corn. This will only be confirmed when governments release actual planting data.
Corn prices have not yet found strong upward momentum in response to war impacts or potential production losses from reduced acreage. Part of the price movement reflects oil and ethanol, but less so the impact of urea. Corn has also followed wheat movements, as winter ends earlier in US plains and some analysts suggest dryness may affect early crop development. However, weather forecasts indicate normal to above normal rainfall across the Midwest in the next 15 days.
A larger impact may still come from Ukraine, a major wheat exporter, and from Russia due to shipping issues in the Caspian Sea. Even so, global wheat supply remains comfortable, with prices rising above US$ 6.00 per bushel, providing some support for corn.
Another major development was the approval of E15, allowing 15 percent ethanol blending in gasoline, requested by eight US governors due to high gasoline prices. The government authorized emergency implementation. For these states, ethanol demand could increase by 50 percent as blending moves from 10 to 15 percent. The uncertainty remained around ethanol mandates, requiring increased production authorization.
Last Friday, the Department of Energy released new mandates for ethanol and biodiesel. For corn, domestic ethanol production was set at 15 billion gallons for 2026 and 2027. Any production above this must be exported. In 2025, preliminary data shows 16.5 billion gallons produced, with 2.19 billion gallons exported according to the Renewable Fuels Association. This indicates continued growth in corn consumption for ethanol over the next two years.
Thus, on May 10, the USDA is expected to project record corn consumption for ethanol in the 2026/27 cycle. Another important decision was the biodiesel mandate. The sector had proposed increasing production from 3.6 to 5.25 billion gallons. The Department of Energy approved 5.61 billion gallons. If produced entirely from US soybean oil, this would require an additional 16 to 17 million tons of crushing capacity.
However, the sector expected restrictions on imported feedstocks such as palm oil, used cooking oil and canola oil. Since some of these are highly competitive in the US biodiesel market, the absence of restrictions was seen as a lack of protection for domestic production, especially palm oil which entered with zero tariffs.
As a result, despite the strong increase in biodiesel mandates, soybean complex prices declined after the announcement. The EPA maintained support for domestic production but without disconnecting from international competitiveness and supply via imports. These rules are expected to change only from 2028 onward.
It is also important to consider that soybean complex prices have been rising since December mainly due to expectations around biodiesel demand. In addition, there is strong domestic demand growth and a trade agreement with China involving 25 million tons of US soybean purchases starting in September.
All of this influences US planting intentions for 2026, to be released by the USDA on March 31. However, the survey was conducted before biofuel decisions. Factors such as high urea prices, corn soybean price ratios, crop rotation, high corn stocks and lower prices compared to 2025 remain key drivers. Consensus estimates point to 94.5 million acres for corn versus 99 million in 2025, and 85.5 million acres for soybeans. These will be reassessed on June 30.
The April WASDE report will not yet include biofuel mandate adjustments or planting intentions. These will be incorporated in May. Planting in the Midwest begins around April 20, with weather becoming a key factor. Rainfall is expected to be normal to above normal, which may delay corn planting. In addition to war effects, the 2026 weather market will drive volatility.
Globally, supply remains comfortable without panic. March rains have secured Argentina’s crop, with strong yields and technically safe crops.
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