The markets are preparing for another Surprise Saturday.

Morning session ended mixed, with corn and wheat re-looking at yesterday’s lows while soybeans found a firm tone on strength in soybean meal. With the crush giving up its strength on soybean oil, it’s reversed, ensuring that it respects the value at the late February, early March support values in the 315 range.

While many would say yesterday’s report was a non-event, they avoid talking about the shenanigans the USDA went to in order to keep carryouts steady on corn/beans and to push world supplies higher on wheat. Because the strong crush and profitability had been seen, they were forced to raise crush uses by 35 Mil Bu, but rather than lower the carryout by that amount and create a spike on bean values, they looked over at the export side and decided to lower that number by 35 Mil Bu as well and call carryout steady and good. The roll of the dice that will bail them out is if there will be a big bean crop later this summer, when they will then have to readjust the export number for the old crop lower. China will be buying those 8M MTs of beans, and they will likely get started just before Emperor Trump arrives in China by mid-May.

Yesterday’s substantial 6 MMT jump in the world carryout number was driven mostly by India. There increase absorbed 80% of that gain. India never exports their carryout. The exception was during the COVID emergency, but, just like China, India should not be included in global carryout numbers, as it never exports. Outside of India, minimal adjustments were made to the upside on the world wheat carryout.

Beyond the usual supply-and-demand considerations, geopolitical developments are adding another layer of complexity. There is growing skepticism around the durability of the current Middle East ceasefire. While the U.S. maintains that conditions are stabilizing, activity on the ground suggests otherwise. Israeli operations in Lebanon are ongoing, though there are early signs that negotiations could begin to ease tensions. At the same time, Iran remains active across the region, and the closure of the Strait of Hormuz continues to disrupt normal trade flows, as what used to be 100 transits a day is still struggling to even achieve 10. These conflicting narratives are keeping global shipping companies on the sidelines, with many unwilling to return vessels to the area. That hesitation is critical, until maritime traffic resumes with confidence, markets will struggle to find direction.

As far as the weather is concerned, there are some showers dropping this morning in a few areas of western Kansas, but after this event, it looks like the Western HRW wheat belt will come up short on the forecasted rains into early next week. There are numerous stories emerging that fields are already being abandoned. Some fields are said not to be grazed if rain were to arrive. The bigger story, versus weather, is the wheat shortfalls due to limited fertilizer availability in Australia, along with India’s need for rice and winter wheat plantings, and Brazil as well. It may take six months to realize what has happened, given the bearish attitude the grain trade has at present. But there is no doubt going to be a tightening of wheat supplies compared to the flush nature the market has become accustomed to.

Live and feeder cattle futures enjoyed another strong session yesterday after a wobbly morning. The cash feeder index has become quiet lately, but did show a gain of $0.45 at $364.10. Feeder cattle futures are now trading at a hefty premium to the cash index, a complete flip from where the market was 30 days ago. There were some scattered sales yesterday, reflecting a $2 gain, with trade at $246- $ 248. Numerous offers are sitting at 250 in the South.

On tech trading, June cattle are hovering just below continuation resistance at 248-248.50 with now near-term support at 241-242. May and August feeder cattle are almost the same price, with August feeders taking over the contract status later next week. This means support/resistance applies to both. Resistance is at 372.50-374, then there is a gap on the continuation part chart and 375 up to 379. Given the volatility in the cattle trade, these numbers will likely get pinball the against before pushing through.