May canola is down $6.70/mt, May soybean oil is down .18 cents/pound, May European rapeseed is down 2.25 euro per mt and June Malaysian palm oil is down .13%. May oats are down 1 1/2 cents/bushel. May crude oil is up $3.30 per barrel, May ULSD is up $.1009 per gallon, and the June Canadian dollar is up .00025 at .72090. The June U.S. Dollar Index is down .059 at 99.745 and the May Brazilian real is down .00060 at 0.19270.

Energy markets are sharply higher as Iran cut off all diplomatic channels (ahead of Tuesday evening's deadline) in response to Trump's social media post saying an "entire civilization will die tonight." Attacks and warnings from both sides point to a serious escalation of the war already. Iran has also threatened to close the Bab al-Mandeb Strait which would essentially cut off all oil exports from the region through the Red Sea, the only remaining exit point. It is through that passage Saudi Arabia has been able to ramp up exports by maxing out capacity of its overland pipeline, helping to provide almost 12% of global oil shipments by sea. As a side note, the Suez Canal is not large enough to allow the passage of oil tankers from the north.

In an odd reaction, grain and oilseed markets have all turned materially lower on the developments with the most reasonable explanation seeming to be that world reactions to Tuesday's developments could be a reduction in demand for U.S. exports. China certainly would be top of the list that could be making threats given their reliance on Iran's oil exports and Trump's claims that he would like to take Iran's oil. Kharg Island (the outlet for 90% of Iran's oil exports) has already been hit by U.S. and Israel strikes Tuesday morning with those so far being focused on military assets but certainly could be in preparation for a ground invasion. Taking the island has been debated as the most likely beginning point for such ground troop involvement.

In outside markets, stocks are sharply lower, Treasuries are quietly lower, as is the U.S. dollar.

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