The US and China are at the table talking.

The grain trade moved higher overnight following yesterday afternoon’s announcement that the US Treasury Secretary and the Trade Ambassador will meet with top Chinese trade negotiators later this week in Geneva, Switzerland. Rumors are circulating that tariffs may be cut by 50 percent as the new trade delegations aim to ease tensions and lay the groundwork for future negotiations. The US is expected to push China to fulfill its pledge to secure 80 billion dollars’ worth of US goods from the still-open Phase One agreement. In turn, China will likely push to gain access to high-end US computer chips. The key takeaway here is that China is actively engaging in talks, and corn and soybeans could see a significant boost if a breakthrough is achieved.

Due to the drought in northern China, and following yesterday’s announcement of wheat production losses in Henan Province, unconfirmed rumors suggest that China is seeking to source wheat globally, possibly from Australia and Canada. While these rumors remain unverified, they are circulating throughout the futures market. Overnight wheat prices softened, as wheat is unlikely to be part of immediate purchases, though it could benefit from strengthening global wheat values.

This coming Monday brings the May WASDE crop report. Ending stocks for row crop corn are projected at 1.004 billion bushels, down 22 million from last month. Soybean stocks are expected at 369 million bushels, down six million, while the wheat carryout is expected to increase by four million bushels to 850 million. There are considerable questions about the true pace of demand, largely due to the uncertainty surrounding US trade and tariff policies that could change abruptly. Potential new trade deals rumored to be in the works with Vietnam, South Korea, and possibly Japan may impact new crop corn and soybean stocks.

The world is closely watching the escalating tensions between Pakistan and India, especially after India’s airstrike into Pakistan. This development could support global raw material prices, as there are concerns it might escalate into another regional conflict, which would elevate prices for food and fiber commodities.

Across the Central US, the next 7- 10 days will bring warming temperatures, allowing farmers to nearly complete spring planting. Rain is currently falling in Kansas and will push eastward, with showers expected south of Interstate 70. After today, a warmer and drier forecast is in place for the Plains and Midwest, with most rainfall limited to the Gulf states and the southeastern US. The Northern Plains will remain warm and dry, with high temperatures reaching the lower to mid-90s later this week. A strong high-pressure ridge is expected to persist across the north-central US and the Canadian prairies. This heat and dryness will quickly deplete the already low subsoil moisture, with a potential new weather system forecasted for May 16.

In the cattle markets, it was another day of gains as live and feeder cattle futures reached new contract highs, though they closed more mixed by the end of the session. The feeder cash index rose by 38 cents yesterday, hitting a new contract high. Many expect this week’s cash trade in the southern US to be higher, with estimates ranging from one to three dollars more. This would set record prices across Texas and Kansas.

Boxed beef prices rose, with choice cuts up by $ 1.10, while select cuts jumped by $4.90. Select values are now at their highest point since the pandemic rally of 2020. While the cash market is likely nearing its seasonal high, the large discounts already priced into the futures board account for the expected seasonal weakness over the next sixty days.