The grain trade is softer ahead of the three-day weekend after strong gains this week.

The grain trade is softer this morning, with soybeans breaking in the early hours after President Trump announced he would raise tariffs on the European Union by 50 percent, effective June 1, citing a lack of progress in trade talks. Initially, soybeans opened firm overnight, with soybean oil trading above 50.00. This strength followed the release of the MAHA report, which did not take a critical stance on soybean oil. However, the market softened shortly afterward and spent the rest of the night in retreat, giving back some of the week’s gains.

Today marks the expiration of options on the May grain contracts, adding volatility ahead of the three-day Memorial Day weekend. The grain markets will reopen Monday at 7:00 p.m. Officials from the U.S. and Japan are scheduled to meet today for trade discussions. As one of the U.S.’s largest trade partners, a deal with Japan is considered vital.

Much of today’s market activity will focus on global weather. In the U.S., attention is centered on the Eastern Corn Belt to see whether planting progresses this weekend, as wet soils remain a problem in several areas. Farmers in Kentucky are reporting some of the worst field conditions, with replanting needed. Given current economics, replanting corn is not profitable or forcing a crop into saturated ground. With current future values, preventive plant insurance has become more attractive.

Global weather is also being monitored. Rain continues to delay the Argentine harvest, while dry conditions are emerging in Brazil. In China, extreme heat persists, raising concerns that summer corn crop planting could be affected.

Below-normal temperatures will persist across the Central U.S. for the next 10 days. Temperatures may not reach the 70s or 80s until early June. Long-term models show no extreme heat in the Central U.S. during the first half of the month.

Live and feeder cattle futures recovered further yesterday, reclaiming some of last week’s losses. May feeder cattle expired with the cash index down $1.95 at $295.69. August feeders are now trading at a premium to the cash index. Light dressed trade was reported in the North at $360 to $367, while live sales moved higher at $230 to $231. Boxed beef prices continued to improve. Choice cuts rose $1.38 to $360.96, while select cuts gained $0.67 to $348.95. It has been a strong week for boxed beef as retailers build inventories ahead of Memorial Day promotions.

The May Livestock Slaughter report showed that April cattle slaughter was up 4 percent from March but down 6 percent from last year. Fed cattle slaughter was at 96 percent of last year’s pace. The average carcass weight was 1,115 pounds, up 25 pounds from last year. Overall beef production was down 3 percent year over year, with cumulative production down 1 percent and tracking at a five-year low.

The Cattle on Feed report will be released after today's close at 2:00 p.m. Expectations are for on-feed inventory to be 98.5 percent, placements to be 96.8 percent, and marketings to be 96.7 percent of last year’s levels. This morning, stock markets are under pressure amid a broader risk-off tone heading into the weekend. President Trump’s tariff announcement may further weigh on cattle futures today, with the risk-off mentality (even though we don't sell much for beef into the EU), as the cash trade is expected to weaken into June.