Again, soybean prices make new contract highs overnight.

Grain futures are higher to start the day, as wheat and corn find value buying from yesterday’s sharp setback. Weather premiums continue for soybeans as South American crop losses continue to worsen. This month will see CONAB and the USDA needing to aggressively cut South American crop estimates in the upcoming February reports on the 9th. CONAB has been asked by the Brazilian government to correctly peg the crop size (to be careful not to overestimate the size of the crop like the USDA is so fond of doing) so government drought aid can flow to Brazilian farmers more quickly.

Historically, when South America has crop loss issues, the US is the number one world exporter that replaces those supplies. This year, some 27-31 MMT’s a South American soybean loss that will require demand rationing and subtractions from the US balance sheets to accommodate this. As a result, IN THE COMING MONTHS, the US old crop and new crop carryout will be in sharp decline.

The GFS 10-day rainfall forecast for Argentina and southern Brazil remains with limited rainfall and rising temperatures. Of course, above-normal rainfall will continue to slow the harvest to the north in central and northern Brazil. There is even flooding possible in portions of Sao Paulo and Minas Gerias, with rain totals likely to exceed 6.00” into February 11.

Live and feeder cattle futures had a strong session on Monday, with feeder cattle having a substantial recovery as old crop corn prices slid hard on the session. Negotiated cattle were quiet to start the week on limited demand. Box beef values have the choice down to cents at $290.40, and select was off $0.14 at $283.27.

The January Cattle Inventory Report was bullish for the longer-term cattle outlook. Beef cow and heifer inventories were expected to decline but were smaller than expected. The beef cow herd declined 2.3%, matching 2014 is the largest decline since 1997. The total herd of 30.125 million head was the lowest since 2015, while replacement heifers are at 5.6 million head, the lowest in 8-years. April live cattle are at resistance presently at 145.00.