Volatility overnight on Pres. Trump's tweets that reverse gains.

A spectacular night for volatility overnight, with the grain trade managing strong gains as the managed money crowd was heavily selling indexes and precious metals. This all shifted sharply at 6:00 a.m. CT as Pres. Trump indicated that Iran and the US had constructive talks to end the conflict. Causing the grain trade to drop sharply alongside crude oil while stock indexes bolted higher in positive territory on the session and metals recovered some of their extreme overnight losses.

While the grain trade softened in the early morning hours, it’s anticipated that by this Thursday, we will have headlines announcing the final rulings on the RVO and SRE ahead of American Agricultural Day on Friday. Pres. Trump is expected to host farmers and lawn of the White House, where he may face some tough questions.

Over the weekend, China and Brazil reached an agreement on weed-seed tolerance levels to resume the soybean trade. It’s expected that the Chinese will gradually resume buying Brazilian soybeans while the product remains awash in deliveries towards Chinese ports.

As noted overnight, today will be a headline trap, as comments from the White House or Iran via media outlets will create further sharp shifts in pricing. Also, the wheat trade, which had firmed overnight, did so because freeze damage is being seen in the US, especially after the Plains dryness and heat that developed over the weekend. Rain forecasts are still in the 10-day or further out hope category. The wheat trade is where index funds are still short 13,000 contracts in Chicago but have moved long 11,000 contracts in Kansas City wheat.

Friday’s Cattle on Feed report was deemed bearish, with the placements number coming in well above trade guesses at 104% of a year ago. Given the sharp overnight rebound in stock indexes relative to where oil and stock trading were near Friday’s close, this may mitigate losses this morning that would otherwise have been extensive had Trump not made his announcement.

The feeder index was higher last week and ended at $362.06, which is a $4.00 premium over the March contract on Friday’s close. Most of last week’s live cattle trade was near steady with the prior week at $235 in both the north and the south. With the positive move in box beef, the Packers have seen their margins go from $402 over $175/head.

June live cattle continues to eyeball support at 228-229, while major resistance exists at 235. May feeder cattle have support at 339-340 with resistance at 351. The sharp break in crude oil today, with the recovering stock indexes, may alter what could have been a negative price-performing day in the cattle trade. Failure for cattle to respond to the outside influences will be another negative development.