The US dollar strengthens to 109 overnight.

This morning’s grain trade is softer, led by the wheat trade, as the US dollar surges back to 109.00. Rumors have leaked that Pres. Trump will enact a National Economic Emergency Tariff to apply to specific countries, which caused the Chinese Yaun to fall overnight. Soybean oil was the upside leader again overnight as it broke above $0.41 on Tuesday, as spot board crushing margins rose to $1.24/Bu.

Chinese used cooking oil importer values have risen on the West Coast to a price of $.465-.47/pound, well above soybean oil futures. The thought is growing that President-elect Trump will place additional import tariffs on Chinese goods, further restricting UCO’s import economics. This will be friendly for the US renewable diesel producers. Meanwhile, Sen. Grassley from Iowa has blasted the EPA for admitting that it relies on foreign records to prove the imported UCO meets US renewable fuel standards for subsidy/tax credits. He stated that the EPA should not resort to blind faith in determining validity for foreign biofuel feedstocks, especially when 40% of the import supply is from China. This makes the fundamental outlook for soybean oil share as part of the crush look more positive.

Weather models continue to hope that moisture arrives in southern Brazil and Argentina in the 11-15-day forecast. Temperatures remain warm and dry until then, with moisture deficits continuing from December into January 20. The growing concern over southern Brazil and Argentina forecasts is that if rains remain sparse into the last portion of January, yields will be off at least 10% and climbing.

Live and feeder cattle futures pushed higher on Tuesday, with a mixed outlook offered this morning. Yesterday, February live cattle closed firm after pushing to a multi-year high, while the rest of the market set contract highs. Feeder cattle futures found support from continued strength in the cash index and gains in deferred live cattle futures. The cash feeder index picked up $3.66 on Tuesday to a record high of $272.29.

Yesterday, APHIS announced that feeder cattle will likely be allowed back into the US from Mexico in the week of January 20. This may pose a softer start for feeder cattle. It’s not a surprise that the cattle will be coming again; the bullish predicament was how long it would take. It appears it’s in the works to start receiving these calves again within two weeks. How the futures markets receive the news this morning will be a gauge as to the strength of the board. This could be a Black Swan event that typically arrives when markets are supercharged.