The grain trade stabilizes after losses this week.

The grain trade has seen the air come out over the past week, with markets giving back some of the inflation concerns as oil softened. Still, some consolidation ahead of the weekend would be understandable (especially since I expect Iran will do a “Zelinski” and blow the peace plan off the table, always wanting something more).

Positioning may be more active than usual today as traders get ready for next Tuesday’s May WASDE report. This update carries extra weight because it gives the market its first official look at new-crop balance sheets. Expectations are for soybean ending stocks to look similar to the current year, while corn and wheat production are expected to show more meaningful declines.

Geopolitics are also keeping a risk premium in the market. The U.S. continues to point to a ceasefire with Iran, but renewed attacks from both sides have made that label difficult to accept. For traders, the practical issue is not the wording. The question is whether ships can move safely through the Strait of Hormuz like normal international waters. Until that happens without interruption, energy markets are likely to stay on edge. Some economists now estimate the conflict could add roughly $1.00 per gallon to average gasoline prices by summer.

The weather will remain the other major focus. In Brazil, sources in Mato Grosso suggest soybean output could decline 5% next season, tied to higher input costs and the emergence of El Niño. That comes as other regions of Brazil are expected to keep planted area mostly unchanged. In the U.S., planting progress and crop development remain ahead of normal, leaving the market with limited concern for now. There has been some discussion of colder temperatures and patchy light frost, but at this stage, there is no indication of a broad crop threat.

Yesterday’s trade in cattle saw heavy losses right from the opening start, with both live and feeder cattle trading close to limit down in the early portion of the session. Rumors were circulating that Pres. Trump was going to have a phone call with the president of Brazil, and the topic was tariffs and trade. There was no confirmation of any consideration of increasing beef quotas for Brazil and reducing the 25% tariff applied to any beef imported above the quota.

Yesterday’s cash feeder index declined $2.90, while negotiated fed cattle trade went the other way. Dressed sales in the north were seen climbing by $3.00 to $402. The live trade came in $3.00 higher at $255, while the southern trade had seen gains of up to $4, trading between $256 and $258. Meanwhile, the choice box beef yesterday was off $2.68 at $386.94, while select tumbled $5.21, at $384.42. We have an aging bull market, with the board again getting nervous about the ability to climb beyond 260 for live and beyond 380 for feeders.