The grain trade gives up post-crop report gains.

The grain trade moved lower overnight, which is classic after the USDA crop report, with the grain trade going in the opposite direction of how the port day settles. Recall that the bearish January crop report led the grain market to recover over the following two days. The bottom line will from yesterday, is that the USDA really doesn’t know what the true acreage will be and will likely spend the next nine months, similar to last year, trying to figure it out. The response rate from farmers to the 70,000 inquiries mailed out was only 37%. Many of those occurred before the extreme increases in input costs due to the Iran-Iraq War.

With the March data now out of the way, the market’s focus is shifting back to U.S. spring planting. For now, the weather pattern is mostly dry, and in the early season, that tends to weigh negatively on prices because it allows producers to move quickly and make rapid progress in the fields. Drought still offers some underlying support to wheat (and the smallest acreage since 1919), but that influence can disappear in a hurry whenever forecasts turn wetter. Currently, the market believes the rains in the 11-15 day forecast will materialize because, after all, it’s April.

Geopolitics is still heavily shaping market direction. The conflict involving Iran continues to be a major driver of price action, although comments from President Trump suggesting the U.S. could pull back from the Middle East have encouraged some unwinding of the wartime premium. Pres. Trump has stated that the war could be over within 2-3 weeks. Even so, energy markets have only seen spot oil back off to float around 100. Retail gasoline prices are running $1.04 above where they were a month ago, while retail diesel has climbed $1.75. That kind of increase reaches far beyond the fuel pump, pressuring household budgets, altering travel decisions, and raising the cost of moving goods through the supply chain.

Live and feeder cattle contracts are now excessively extended with yesterday’s powerful rally again, with May feeders tagging 368 before a mild correction into the close. The April live cattle contract came within $1.00 of where the February contract expired, doing so on its high. Yesterday’s cash feeder index is at $365.93, reflecting a gain of $1.81. Box beef prices had choice gaining $1.39 while select picked up $1.92. The lack of select great cattle reflects the tightness in the beef market and the fact that the current cattle numbers are walking across the scale heavily fed. As a side note, it takes a lot of corn to convert these cattle into beef as they go from 1300 to 1600 pounds, as reflected in the larger feed usage the USDA has accounted for over the last two quarters.

The June cattle contract high is $1.00 way, along with the spot contract high as well at 244.57. It is likely, ahead of the three-day weekend, that cattle prices will stall just above current levels. Upside objectives and laid resistance for May feeder cattle is 373.50, the spot winter recovery high for feeder cattle done by the March contract, and the May feeder cattle contract high of 376.