alix: sanctions surprise. president trump rattles the market. oil hits a three-year high, and allies consider options. one to the home? by some solar panels. california becomes the first state to require solar panels. the big short, traders are the most bearish on sugar in over a decade. is there any end in sight to the global surplus? i and alix steel and welcome to commodities edge, 30 minutes to focus on companies, physical

assets, and trading from the smartest voices in the business. let's kick it up with spot on. our big investor take on the story on president donald trump's decision to pull out of the iranian nuclear deal. president trump: in a short period of time, the leading state sponsor of terror will be on the cusp of acquiring the world's most dangerous weapon. therefore, i am announcing today that the united states will withdraw from the iranian nuclear deal. alix: joining me is chad brownstein, the ceo of rocky mountain resources, and the senior research scholar at columbia university's school of international and public affairs. he was involved with the iran sanction negotiation. good to see you. iran's, what happened to production and exports?

term,d: for the near nothing changes. the iranians have as much incentive to put as much oil on the market as they can and keep numbers high while u.s. get sections together. alix: they can work around it? richards: i think they can. it may be helping the iranians to of aid sanctions but in the end, they will have some export losses. it is a question of who will they find to buy the extra oil and will they offer discounts? alix: and will they find buyers? i want to put a quote that came out earlier that said whether the price and supply of petroleum and petroleum products produced in countries other than iran is sufficient to permit purchasers to reduce significantly in volume their purchases from iran, it is an addendum to the potential reduction in imports. how tight is the market? chad: today it is tight but the story coming out of this, as

winston churchill said, to protect the most important truths of the bodyguard of lies, and the truth today with iran fighting with israel are the new axis of oil economy integrating towards where the saudi's will deliver their product to the east and making a call for 2028, the u.s. will effectively be energy independent. i may not be right, so maybe i will go to for two -- two for two. alix: it depends on what saudi does. >> i think we have enough production and rigs up. it was the first time since ab3 that we had year-over-year destruction of reduction in this country. for the next five years, i see rig growth, institutional dollars put to work, and a lot of it is equity dollars. the leverage ratios are down 85% on four loans in the market

today, so you have a big equity component. you have a five year program running in front of us. we will have a very tight market. it will hang around 74 and extended amount of time. when independence comes between the two regions of the world, you will see a differentiation between brands and of upi -- brent and wpi. alix: the u.s. will not be with to make up what we listened iran. there are questions as to what saudi arabia capacity is. what do you see it as? richard: i this point, the saudi's have been making it clear that they are most concerned about market share. in terms of actual numbers, it is unclear how much of they have to go because they do not necessarily want to use all of that room if they can instead deal with other producers and that counts with iranians. there are objective with this is to edge them out and damage them geopolitically and they sure their economy is damaged. alix: meaning pump more lower

prices? richard: exactly. alix: we got a tweet from the saudi energy minister, i am in close contact with producers and will be connecting with others to ensure market stability. what does that mean? >> he is protecting the saudi aramco ipo in the coming months because the reality is, the world is confused. they do not know if the off-line or online product of iran is in the markets yet or the prices, so he is trying to stabilize the current prices, which benefit them considerably in today's markets. alix: do you buy it? richard: i think it is right. now we will see the contrary actions and disagreements come out for 10 long-term iranian, long-term russian, and long-term saudi interest. alix: you laid out your thesis, and you will see above 70 but not the kind of huge range we necessarily saw. how do you invest with that? what is your big call?

chad: the most exciting part about the u.s. possibility of energy independent in 2028 is the infrastructure in the country. the oil will be consistently plus or minus around the $70 rail,building terminals, infrastructure, aggregates, the inner workings of the roads that build this country are going to be the most exciting parts of the infrastructure related to creating value. you will get cash on cash yields in the aggregate space today. you are talking something more basic than that? chad: more basic than that, fundamental growth of roads, bridges, and you will see terminals built. you will see mississippi river terminals. you are talking something more basic than that? louisiana terminals. everything that goes to energy infrastructure, as well as advocates and infrastructure related to building it. alix: what is your biggest question you have now? richard: where the europeans will come out on terms of iran and their position to sanctions.

they have said clearly they intend to push back on the u.s. decision to walk out of the agreement. we have to see what that looks like. are the going to introduce legislation that allows them to push back of the target against the united states or not? that will drive a lot of things, politically, and dramatically with iranians, and economically as you look at oil supply. alix: i really appreciate it. let's look at your takeaways. chad sees the new world superpower in oil, and he is investing in infrastructure. richard dusting congress could consider increased sanctions and u.s. partners may retaliate. he is watching europe. it was a pleasure to be with you guys. coming up, the usda rejects lower corn reserves. we will have the details. as we had to break, a look at the big commodity moves of the week. it was not just about oil. coffee and sugar get hammered over supplies. it continues across the globe. this is bloomberg's "commodities

edge." ♪

i am alix steel. this is bloomberg's "commodities edge." we delve deep into market trends. first, national gas inventory numbers up. we saw a field of 189 cubic feet with south-central. the big story in the oil industry numbers is the disappearance of distillates. the product is near a five-year seasonal low with strong export demand and weaker supply. refiners are so in the maintenance season. moving back to iran, sanctions. days tos have about 180 reduce oil imports, and that to get the waiver from the u.s. last time it was 20%. here are what some of iran's top importers might do.

look at india, they could buy crude in euros. south korea and japan are fully they will probably wind up seeking a redemption and waiver. the eu is mark obligated with refiners and trading houses that could custom purchases, not as much as before. everyone was watching opec and venezuela was splitting its time watching conical phillips. -- connoco phillips. pdvsa paid conoco phillips and the company seized most of pdvsa 's assets. >> it is an odd case between ordered conoco court that they go to the caribbean and try to seize assets to make for the money. alix: how do you season asset?

an asset? you seeize >> it is not much different than in the u.s. , and they sees whatever is in their storage in the can sell it to make up for revenues. it takes time to do it but there is moving and they are being serious. alix: what is the broader indication of this? >> this is an opec member. oil production has a red collapse. if this is a bigger issue, you could see more sanctions from the united states into venezuela, it could affect global supply. they will export less, so that could be an impact in the oil price market. alix: do not only look at iran but also venezuela. thank you. now let's get into the three charts, three traits of the week. in washington, we have the latest numbers. the first report to give you 2019 inventories.

let's kick it off with corn. >> when you look at what is happening with corn, the world surplus became in behind analyst expectations and that sent the market up. beeer ethanol demands and demands equals a smaller surplus and bullish for corn. soybeans? about will we see a reduction in imports from the u.s. by china? the big fear when it comes to trade. alan: we have been talking about trade were china and they have already cut back on soy exports from the u.s. but you son of evidence in this report. the u.s. global share of exports is expected to increase as it stays steady. china imports will be going up in the next year as opposed to the 97 million this year. alix: and reserves will be smaller than we thought. right, still in the range of estimates but lower-than-expected. eat.: next, wha

you have to look at that russian reserve, the big stand out to me. alan: russia is flexing a lot of muscle in the week to market. single-handedly. it pushes overall wheat production down and it is going down metric tons. it looks a little bit more bullish for wheat next year. alix: if i am a farmer, i am going to plant like tomorrow, what am i doing? the: a lot of farmers in u.s. are going to be planting tomorrow. the weather has dried out and bridges that come up. you might think to going back to corn. soybeans were supposed to have more but corn is looking like the better play. alix: thank you. coming up, the sugar industry heads for a shakeup. i will talk to a sugar and ethanol manager for the company. we discuss it edge."rg's "commodities ♪

alix:alix: i am alix steel. this is bloomberg's "commodities edge." it is time for what you need to know in the world of alternative energy, solar stocks got a big boost as californians took a giant step, becoming the first

state that requires all new homes have solar power. joining me now is bloomberg's new energy finance. walk me through what california did. >> the california energy commission has introduced a mandate requiring all new built homes and multifamily homes have solar installed from 2020. alix: that means there has to be a lot of supply. i thought you did not have a lot because it was too expensive, why is california different? >> there's plenty of solar, it has been the largest market. is its unusual about this has been forced into the marketplace regardless of economics and how much it makes sense or they will have solar by 2020. alix: we have a chart that shows increase from residential solar. how much demand do project it will rake in? >> may be up to 200 megawatts are year, about a 20% to 25% increase, we would otherwise

expect. the reason being that california build about half of the new homes are single-family, so they will have to double it to meet future housing needs and if it ramps up, we could see a lot more. alix: they use solar energy during the day, but at night, when everyone is home, you wrap up other sources of energy like natural gas. does this help fix the program? >> no, it exacerbates it, if anything. there is a lot of solar generation in projects and on rooftops, and all of that suppresses it during the day and displaces gas generation. residential solar rooftops do not see the low-power prices it results in because they are offering retail rate and not wholesale, so the deal goes down regardless. what this means is the build does not matter anymore. more solar will be added.

is not aseems echo it solar play but a battery play -- like it is not a solar play but a battery play. stands, there is nothing in the mandate that forces it. chances are california wanted to go back and revise how it compensates it in the future and that will likely become a battery play. for now, it is a solar play and that is why we saw some stock jumped, albeit unusual suspects. alix: like tesla. >> tesla, all of those firms specializing solar products, and when you build solar on new homes, chances are you have to roll it into your mortgage or home improvement loan. alix: interesting distinction. thank you, hugh. now, let's turn to commodity, where we focus on one executive in the commodity world and it is .runo lima from intl fcstone

let's take a closer look at sugar. it is in everything. you love to eat it, and if you are a traitor, you are definitely shorting it. sugar. prices are near a decade low and battling the largest short position and 2006. why? india. the world's second-largest producer is inching towards record production and a harvest could top 31 million tons this year. the government once the sugar out and has a plan -- want the sugar out and has a plan.it asked sugar mills to ship ,1 million tons overseas following an import plan and spending $231 million to subsidize payments made by mills to farmers. they are losing 11 cents on everyone kilogram of sugar they sell any help to pay farmers on time. the result?india will dump more sugar on the global market .

i recently caught up with bruno to get his take on sugar. inno: we have been to india the beginning of march, and we ane was doingr c so well and the crop was supposed to be very good. the thing is, for them, it is not their objective to export sugar or produce as much because it is not a matter of price, more a matter of weather. if it is good, they produce. if it is bad, they will not. it is more of a social program kind of thing instead of markets, as we are used to. alix: is there anything that they can do to offset that? they talked about going to the wpo or filing a complaint. in reality, is there anything that can be done? bruno: there is definitely going to be the wto would be a thing, but the way they are doing it, it is not a direct subsidy but indirect.

they have done that in the past. in 2014, they have done that, they subsidized the cane producers instead of the mill and there was no success on the wto. alix: what is your projection for indian production out versus next year? bruno: it should grow because of that. the reservoirs are pretty full. the season is expected to be on average, so that allows them to keep planting. alix: if you have indian farmers not susceptible to price but european farmers are, in theory, and the eu has produced a lot of sugar this your, to the wind of reacting to lower prices and cut back on planting next year? bruno: not in europe, not now. about two thirds of the meat producers in europe made two-year contracts last year when prices were high, so basically, because of that, they will continue to produce. they had a lot of spare

capacity, so for them producing, it is better than not producing, so we are not expecting area reduction in europe, but it is possible because of weather to have reduced production a little bit. alix: it will be more on the margins than it seems. the demand side is the other side and the organization said we will see consumption grow by 1.6%. what is your forecast? bruno: we expect 1.2% growth. alix: wow. bruno: it has to slow down because up until 2014-2015, we saw almost 2.2% growth every year, and because of the crisis, it slowed down a little. it is starting to recover, and that is a good thing, but for this year, and for the next, we are expecting 1.3, 1.4. it will take a little, but with

india and thailand mainly, it will be hard to wipe out the surplus. alix: the other part is at that we would use all this sugar and make ethanol with a huge demand. where is the rhetoric? bruno: that is happening in brazil. brazil did homework. we are producing just as much ethanol as we can. right now, we are ticking out of the market 5.1 million tons of sugar, just result -- just brazil. a little more. we can take an additional 1.9 million tons out of the market. alix: which is not enough to make up for the surface we will see. how much more downside is there in prices when shorts are at the highest since 2006? walk me through the end results. bruno: we are not expecting the but we to go much lower, are expecting the markets to continue sideways. we can definitely see rallies because of the funds and it can

cover it a little because we were so low, but at the same time, any rally or recovery of prices will be met by producers. alix: here is what is on my commodity radar, monday, the opec monthly report is out. what will opec compliance be and how will it change after the iranian sanctions? also, the future of mining conference in sydney. the mining industry has been difficult the last few years with a lot of mergers in the space. what more we hear from the hub of the metal world? in that region, look for the aluminum as front and center as inventory wound up falling this week and subject to tariffs from the u.s. and that we will get earnings on friday and they 20, a pivotal day, i want to put it -- may 20 ,, a pivotal day, the venezuelan elections. you do not want to miss them. some say the venezuelan issues are a bigger deal to the oil

world than iran. that does it for bloomberg's "commodities such." -- "commodities edge." ♪ retail.

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jonathan: from new york city, i'm jonathan farro. this is "bloomberg real yield." coming up, weaker than expected inflation. ♪ solid demand for treasuries. the yield curve flattened since 2007. from hopes to bust. a year ago argentina issues a century bond. a year later, there are requesting ims health. we begin with a big issue. is 4% the new 3%? >> is there a possibility the