The wheat trade sees ratings decline in Monday afternoon’s crop condition report.

In the overnight session, wheat and corn got underway with an aggressive Turnaround Tuesday. Wheat saw gains of as much as $0.10 on US crop ratings tumbling 4-6% from the good/excellent ratings. Strength also came from weather forecasts indicating that conditions will remain dry for the next 10 days, but they always offer hope in the 11-15 day window that just never quite makes it into the nearby forecasts. This creates a mixed morning session, with wheat and corn showing a bit of strength while soybeans soften, despite crude oil recovering into the 90s. This shows the market is ready to start consolidating ahead of next Tuesday’s all-important acreage and quarterly stocks report.

The run-up in fertilizer costs is starting to alter planting decisions, and there is still room for some undecided ground to move away from corn and into soybeans. Market analysts have largely downplayed that risk, arguing any switch will be limited to fringe acreage. Still, there is chatter around the country suggesting the change may be broader than the trade is assuming, as poor profitability last fall led some farmers not to make fall purchases. With corn seeding already advancing in the South, attention is increasingly turning away from old-crop concerns and toward the shape of the new U.S. growing season.

Geopolitical tensions are back at the forefront of the market this morning, with conflicting signals surrounding the situation between the U.S. and Iran. Washington has indicated it is pausing strikes on Iranian energy infrastructure for several days, suggesting diplomatic efforts may be gaining traction. However, officials in Tehran are pushing back on that narrative, dismissing the idea that meaningful negotiations or a ceasefire are currently on the table.

Energy markets are responding accordingly, clawing back a portion of the prior session’s decline. Even in a best-case scenario where hostilities ease quickly, restoring disrupted supply chains will not be immediate. Bringing production and distribution back online is likely to be a drawn-out process measured in months, and potentially longer. As a result, any expectation of near-term relief at the consumer level appears optimistic. Elevated energy costs are poised to linger, adding another layer of pressure on the broader U.S. economy as it approaches peak summer demand.

It was a higher day for live and feeder cattle futures on Monday, as outside markets reversed violently higher in the early morning hours, averting weakness that would’ve otherwise been seen post-COF report from Friday. Meanwhile, the cash feeder index slipped on Monday by $0.73 and is at $361.33, while March feeders picked up a bit, narrowing the spread ahead of expiration.

Last week’s negotiated cash trade, which took place mostly at $235, was steady with the prior week. The packers are now profitable and have built up a small amount of cattle around them, but trading this week may allow for a firmer cash outlook. Outside markets this morning are considered negative for the cattle trade, so a steady, soft opening is anticipated. We have a Cold Storage report due after the close today, which will measure demand. Technically, live cattle turned friendly if they can trade above 236, while May feeder cattle would also take on a more friendly look if they can clear 351.