A lower grain trade starts early week trading.

This morning's grain trade is mostly softer, except for Minneapolis wheat, which shows slight gains of a penny or two. Last night's market opening was influenced by a sharp drop in crude oil after Saudi Arabia announced plans to push OPEC’s oil production up by 2.2 million barrels a day by November. Crude oil was down as much as $3.00 overnight, but the losses have eased to about $1.00 this morning. This pressured corn and soybeans due to the biofuel connection. Wheat had been supported after Ukraine struck a Russian grain port over the weekend, but those gains faded by morning.

Soybean weakness is also linked to soybean oil, as there are concerns about Z45 credits being cut by the President. Trump has proposed nearly a 50 percent cut to the EPA budget.

China is on its spring festival holiday, and the market is waiting for new trade discussions. US economic advisor Kevin Hassett stated that one of China's first steps must be to comply with the Phase 1 agreement they signed in 2020. This agreement requires China to secure $80 billion in US goods, a target they are behind. If China met this commitment, it could significantly lift US grain prices. However, this remains uncertain as the market waits for any urgency from China. Reports from China indicate massive layoffs are underway, with some factories beginning to shut down.

The May WASDE crop report is set for release on Monday, May 12, at 11:00 a.m. Central Time. Old crop stocks are expected to be reduced, but with the safrinha corn crop looking fairly good and expected to be available by July, along with US corn acreage projected at 96 million acres and ending stocks above 2 billion bushels, the market is not finding much reason to rally. Crop conditions in South America are favorable, and the US is set to begin summer with a solid outlook.

Ukraine reports that drought and frost during April, which have continued into May, are expected to reduce production considerably. Additional cold weather is a threat this week, but wheat yield assessments are unavailable. This is also affecting southwestern Russia. However, the grain market continues to be dominated by a large speculative short position, impacting not only French milling wheat but also US soft red winter and hard red winter wheat contracts.

Planting is progressing quickly, with dry and warm weather across the Central US, and it is expected to continue over the next 10 days. This afternoon’s planting progress report is anticipated to show corn nearing the 50 percent mark as of Sunday, with estimates around 46 percent, while soybean planting could be at 32 percent. Winter wheat ratings are again expected to improve into the 50 to 52 percent range, with spring wheat seedings just over 50 percent.

It was a volatile week for live and feeder cattle futures, with both closing at their highest levels of the year. Strong cash trade provided support, with live cattle in the South trading near $218 and some at $219. The cash feeder index rose by $6.50 to a new record high of $296. In the North, sales reached $222 to $223, with dressed sales at $350 to $352.

Boxed beef values also posted strong gains last week, with choice cuts up $6.42 to $342.90, while select cuts jumped $5.24 to $325.35. These are the highest early May prices since the pandemic in 2020.

We have been targeting a measured move theory of 212 to 213 for June cattle. With June cattle typically trading about $10.00 under cash in early May, this suggests the potential for cash trade in the South to reach 223 if current momentum continues and there is no pushback from consumers on pricing. Seasonally, the cash trade would be expected to peak no later than this week before larger numbers come to market heading into summer. Given the unusual dynamics in the cattle cycle, projecting a top is challenging with so much bullish sentiment in the market. Caution is advised.