On another volatile Sunday night for oil, soybeans are optimistic ahead of the upcoming Chinese/US summit in 10 days.

It was an interesting overnight trading session, as grains did open softer, but that did not last long. Corn and soybeans endeavored to climb back towards Friday’s highs, with soybeans exceeding them. Oil prices recovered in the evening to just post small losses, but in the early morning hours, a false story of the US naval ship being fired on with missiles and hit turned out to be fake news. Oil prices eased from an overnight high of 107.46 but still maintain a small gain for the session, as the opening of the Strait of Hormuz is not becoming as easy as Pres. Trump’s tweet on Sunday afternoon implied.

Pres. Trump is getting impatient with Iran, as the nuclear ambitions need to be eliminated. This implies the Strait of Hormuz could likely be closed through the month of May. With oil reserves around the world starting to run thin, the prospect of the $120 price range high being retested is becoming increasingly likely. Fertilizer continues to leave the Persian Gulf at a rate that is too slow to meet demand, putting new wheat production in Brazil, India, and Australia at risk. Keep in mind the ships are leaving notice that there is no intention to return to the Persian Gulf until it is completely cleared of hostilities.

There is now a conversation about whether new bean planting in Brazil could be affected if the Strait remains closed into June. Abundant food supplies around the world that we have become addicted to require a steady flow of fertilizer, which has been shut off for two months, and it looks like being closed for another month is becoming the reality, with the June opening needed to avoid elevating grain prices this fall. Most commodity traders can’t think beyond the day, thinking two months out is difficult for them, which implies farmers are dealing with elevated costs that need to be applied to higher sales values. The selling early and then forgetting to worry about it in the grain trade over the past three years ended in August of last year.

The US/China summit still appears to be on track for May 14-15. Soybeans are finding support on their recent breakout amid the view that China might secure additional soybeans ahead of this meeting. Prospects are growing that China may secure up to 12 MMT of old-crop beans this year, ahead of its 25 MMT new crop agreement in February, which is bringing renewed optimism for soybean prices. Notice last week, when crude oil prices tumbled, the grain trade did not necessarily follow it lower tick for tick. Independence was shown not to be entirely dependent on the rise and fall of energy values.

Rain is creeping into Colorado in Western Kansas later today and into tomorrow, with ranges mostly in the .25 range, up to 1.25” is possible. Northern Kansas cannot be helped anymore, but this will help eastern Colorado, and the Western Kansas wheat fields under center pivot. In Brazil, safrinha corn is starting to show signs of dryness, which is a problem when the crop is planted several weeks later than the optimum planting time. When the planting time is missed, pollination occurs during a seasonal window of drier, warmer weather, but the rains that would’ve occurred earlier were subpar. Yield reductions are in the making for the Brazilian corn crop. It’s the second corn crop that is exportable.

Live and feeder cattle futures enjoyed a robust trade last week to the upside, with new contract highs being seen Friday morning before a vicious reversal occurred on what, at this time, is only explained as a result of the week's profit-taking turned into a snowball selling effect. This morning, the strength in crude oil and the weakness in the stock indexes have been muted since the overnight hours, leading to a steadier, friendlier start to the cattle trade.

Last week’s cash feeder index ended at $ 374.03, a gain of $4.71. The cash trade was sharply higher over the prior week, at $ 255-257, showing remarkable gains of almost $10. This occurred despite the kill rising by 5,000 head over the prior week, which is still 29,000 head below a year ago. Box beef values did show small gains last week, but not enough to offset the increases in Fed cattle. Support for June cattle remains significant at 249-251 while upside targets remain near 262. August feeder cattle have support on the charts at 368-369, with continuation highs at 383-384 being upside hopes. 375 has been an albatross for August feeders. It can breach it, but so far has yet to close above it.