Options expire for May grain contracts today.

Grain futures are trading mixed this morning after trending higher for most of the overnight session. Soybeans extended their recent rally, decisively breaking above the 200-day moving average. This move was supported by news that Japan will include soybean purchases in its ongoing tariff negotiations—a significant development, as Japan was the fifth-largest buyer of U.S. soybeans in the 2023/24 marketing year.

Today marks the expiration of options on all May grain contracts, with the first notice day for deliveries being Wednesday, April 30. It’s common for grain markets to weaken ahead of option expiration, much like holding a ball underwater—once released, a sharp recovery often follows.

Export demand for both corn and soybeans has remained strong. Monday's export inspection numbers and Thursday's weekly export sales report confirmed this trend. Based on current momentum, the USDA’s WASDE report may need to increase export projections by 100 million bushels for corn and 50 million for soybeans. These adjustments could further tighten old-crop stocks and potentially trigger a price rally in May.

On the international front, India is emerging as a potential new U.S. Soft Red Winter (SRW) wheat market. While India imposes trade barriers on GMO crops like corn and soybeans, it has no such restrictions on wheat. Discussions are underway for India to import significant volumes of U.S. corn—not for food use, but to support its growing ethanol industry. If India proceeds with SRW wheat imports, it could notably reduce U.S. wheat carryout levels and boost production incentives in the Chicago wheat region. There are also rumors that trade deals with India, South Korea, and Japan could be announced within the next week.

Weather remains a key factor. The next 10 days are expected to bring warm conditions, supporting planting progress. As of this Sunday, corn planting is projected at around 25%, with soybeans at 21%. Spring wheat seeding is underway in the Dakotas, though upcoming rains may slow progress. Recent precipitation in Kansas will likely improve wheat crop ratings in next Monday’s report. In the Midwest, storms are expected every 3–4 days next week, and more drought relief is forecast for the Plains this weekend.

Globally, weather concerns are growing. Dryness in China, combined with above-normal temperatures over the next two weeks, threatens their wheat crop. In the Black Sea region, rain is expected to be patchy around May 5, adding uncertainty to global wheat production.

In the livestock market, cattle futures saw a mostly higher close yesterday after a choppy session. June cattle was the exception, ending slightly lower. This morning, a mixed open is expected as the negotiated cash trade has yet to take shape. In the South, sellers are asking $214–215 per hundredweight—a $5–6 increase over last week—while the North sees carcass-based offers at $340, up $3.

The April cold storage report showed March beef stocks tightening by 2% from February, totaling 427 million pounds. This is 1% higher than a year ago and marks the end of a 27-month streak of year-over-year declines.

Our technical wave analysis suggests that the recent market strength may be overextended, posing a risk of pullbacks heading into May. Livestock Risk Protection (LRP) hedges or option strategies should be considered now.