Grains consolidate after overnight gains faded.

The overnight grain market had found follow-through buying optimism in the early session on Pres. Trump will be traveling to China, confirmed for May 14-15. That faded at the end of the night trading. But oil prices remain elevated as we get closer to the weekend and to the President's five-day warning to Iran ends. This could set up for renewed fighting in another active weekend. Frankly, something is going to break in the economies around the world if oil prices surge again after consolidating in the 85.00-92.00 range and again press higher. Iran is threatening to chokehold the Red Sea as well.

Market optimism about a near-term resolution to the conflict persists, but developments on the ground suggest otherwise. Ongoing military activity and conflicting signals from leadership indicate that tensions remain elevated, a reality that is feeding directly into higher energy prices this morning and, in turn, lending support to agricultural markets.

While President Trump has publicly suggested the situation is under control, the simultaneous deployment of additional troops tells a more cautious story. Meanwhile, Iran is pushing back against claims of diplomatic progress from Washington, and Israeli strikes on Iranian targets persist, reinforcing the sense that the situation is far from settled.

The knock-on effects of rising energy prices are becoming clearer across the broader economy. Consumers are already feeling the strain, with higher fuel costs weighing on discretionary spending. The travel sector is responding accordingly; U.S. airlines have begun trimming flight schedules as operating costs climb and raising ticket prices. Elevated gasoline prices could dampen demand for both air and road travel heading into the summer season.

From a market structure standpoint, positioning ahead of next Tuesday’s key reports is likely to take shape today. With the added dynamic of both month-end and quarter-end approaching, an uptick in contract squaring and portfolio adjustments is expected, which could amplify price movement in the near term. We anticipate the EPA will announce RVOs and SRE allocations at the end of the month, which will likely be a “buy the rumor, sell the fact” event.

The US Plains continues to struggle, with numerous weather models now keeping the rain out of the primary HRW wheat areas, a freeze event last week, and now high temperatures. Not what you want, especially after the freeze. Crop ratings will decline again next Monday, and with the models dry through next week, we will see a decline in the following week as well. Wheat futures are supported on breaks.

Cattle tumbled into the close yesterday on a sharp break in box beef, with choice dropping $ 8.22, trading at a $5.00 discount to select. Cattle are frankly coming in a bit too heavy, and demand is slackening. This is putting pressure back on the charts, with the cash trade this week at best steady money. Even a light test of the dressed trade in Nebraska yesterday at $were 372 was steady with last week.

Outside markets are again price-negative for cattle, prompting a lower start this morning. Technically, yesterday the charts remained negative, with June cattle faltering at 235, which now draws attention to support that could be challenged in the 228-229 range. Likewise, active May feeder cattle failed to hold and climb through resistance yesterday, allowing the potential for downside price probing again. The stock market is lower by 60 points on the S&P this morning and by almost 400 points on the Dow. That will be the barometer of the cattle market on the day. As Mr. stock market goes, lately, that is how cattle futures go.