Another new contract high again for wheat overnight. Dryness remains pervasive.

Grain markets firmed overnight, with corn, soybeans, and wheat all finding support as managed money continues to rebuild length. The buying is being tied to a broader risk premium that now includes both weather concerns and geopolitical uncertainty. Dryness continues to engulf the heart of the HRW wheat belt, with GFS and Euro models both giving up on trying to bring long-term rain forecasts into nearby prospects.

Weather is not offering the market much comfort. Parts of the U.S. remain less than ideal, including light frost reported in northern Kansas this morning, while overseas conditions are also drawing attention. Drought is affecting Australia and parts of Asia, China is dealing with too much rain, and Brazil is becoming a bigger focus as local reports suggest the safrinha corn crop is drying down. Longer-range global forecasts are also putting more weight on El Niño risk than the NWS appears to be, with some outlooks pointing to potential drought stress in Brazil as the next soybean season develops. That is still a forward-looking concern, but traders are beginning to price it into the conversation.

The war premium is also keeping buyers engaged. Energy flows through the Persian Gulf remain disrupted, and energy prices continue to climb. Even with the White House saying the conflict is over, markets are unlikely to fully relax until vessel traffic returns to a steady pattern. That uncertainty is feeding more “higher for longer” energy forecasts from economists, which adds another layer of support across commodities.

Today’s trade could also be shaped by positioning. May contracts enter first notice day tomorrow, and month-end is also approaching, both of which may encourage additional position evening. The market will also digest weekly ethanol production data this morning, followed by the Fed’s rate decision around 2:00 p.m. No rate cut is expected, and given current market conditions, discussion has shifted more toward the possibility of another hike.

Energy values pushed higher overnight above 100 again as Pres. Trump is not accepting Iran’s latest proposal asking for the Strait of Hormuz to be opened, and the fact that they want to defer nuclear talks is just part of their old game plan. Stal, stall, stall. Pres. Trump plans on maintaining the blockade, but only allowing the flow of products, slow as it is, to exit from the Persian Gulf that is not of Iranian origin.

Soybean meal made a spectacular move on Monday after Argentina canceled cargoes from the Netherlands due to the HB4 gene. There is a discussion that some false positives were triggered, suggesting Argentina may get this resolved quickly also the Argentine harvest did not have much of that supply planted. Still, soybean meal has maintained those gains. The old-school Bears are out again in full force, talking about how our grains are well above world values, yet we continue to see exports move right along. Kansas City wheat prices are bolting higher, looking to limit trade. The question is, what price will that take, and is the HRW wheat crop below 575 million bu?

Grains continue to elevate in price, likely heading for a first of the month perspective (short-term) high.

The livestock trade yesterday continued its spectacular rise into new all-time highs for live cattle, with June being the baton bearer for the race, just like last year. Seasonally, we see if faltering in price from an April high into June, but not in this dramatic aging bull market. The cash feeder index remains quiet, and yesterday showed a gain of $0.28, ending at $ 369.62. April feeders are representing a different story heading into the cash settlement this Thursday as is trading at 372. There were live sales trends reported yesterday, with the South reporting $255, $9 higher. The north on the dressed trade was in the 395-400 range.

The cattle market has turned Black Swan events into fodder and is eating them up. Technical targets suggest June cattle can swing to 260-262 (in time), while August feeders look for a retest of 383, the all-time high, and, on measured move theory, a prospective trade to the 392-398 range.