Grain futures recovered sharply overnight from last Friday’s break to start the week on SA weather.

The overnight grain trade opened higher and continued higher throughout the night session regarding Argentina and Southern Brazil weather. We are starting to see some genuine concern develop over too much dryness, with heat building in parts of Argentina and eastern Paraguay. Brazil has split weather issues: far too much moisture is seen in central and northern parts of the country where harvest should be getting underway, with too little moisture and heat building into the south.

Much of the concern centers on how this impacts corn, with reports of quickly deteriorating conditions in Argentina and Southern Brazil, where the bulk of first crop and full-season corn is grown. In addition, the heavy rain in northern and central parts of Brazil is causing concern regarding Safrinha corn planting, as we are already looking at harvest delays across the region with more heavy rain on the way. The forecast locks in the current pattern for the next couple of weeks at least before any shift is seen, and confidence that a change will occur will be relatively low.

Reports began to circulate early this morning that President-Elect Trump may be considering a significant change to his heavily discussed tariff plans. During the campaign, Trump floated tariffs on Chinese goods as high as 60%, with several similar threats made to our closest trade partners. According to the report making rounds this morning, citing several Trump aides, the administration is considering blanket tariffs on imports from all countries but plans only to target the ones they cite as ‘critical.’ What fits the bill as critical is somewhat unclear. Still, according to sources, the 10-20% tariffs would only apply to items essential to defense, like iron, aluminum, or copper, also targeting certain medical supplies and supplies they deem critical to energy production. Whether this is a shift or in addition to other tariff plans is not 100% clear at this point, but if we were to see a change in approach, it could be critical for trader sentiment.

Over the weekend, Ukraine launched a renewed push into Russia’s Kursk region that was reportedly rebuffed. Talk is increasing that logistical issues are growing for both Russia and Ukraine as the two lob drones and missiles at one another.

Live and feeder cattle futures closed higher last week, and a firm start is anticipated this morning. Strength in the cash market late last week lifted February live cattle to $196, the highest since September 2023 and a record price for nearby futures. The market struggled to sustain the rally on Friday and closed lower for live and feeder cattle. January feeders, before tumbling, rose to the highest price since last March while the rest of the feeder market contract set contract highs. The cash feeder Index gained $7.44 to a record high of $265.76/CWT.

Box beef values last week were higher, with Choice picking up $2.86 and Select $5.59. Both values are at record prices. Cattle started on Friday as cattle futures had become overbought in the cash market. The beef market has gained $15 in seven weeks. The beef market needs to continue gaining to support higher cattle futures values. However, tight-fed cattle and feeder cattle supplies will offer support on corrections, especially with this week’s cold weather limiting weight gains.