The morning grain trade turns lower after early evening strength.

The grain trade pushed higher on Thursday evening on follow-through technical buying from the firm closes across exchanges led by wheat on Thursday. Yesterday’s comment from US trade representative nominee Jamison Greer indicated that China’s compliance with the Phase 1 trade deal was going to be used to force them to buy US products.

The trade war was essentially won in 2020, and China has only purchased 50% of its pledges of $200 billion in US goods in the two-year 2020 phase one deal. That left $85 billion of US goods that Greer will demand that China secure before any reduction or stay on the existing US tariffs. He stated that China cannot negotiate about future purchases until it resolves and pays for its prior commitments. The lack of further news this morning had the grain trade softened, as closing at overnight highs would imply a breakout with improved momentum on such a strong Friday close. Today’s action will be paramount on this.

USTR trade nominee Greer also indicated that Mexico and Canada are working to resolve mutual border security and fentanyl. Still, there are trade deficit issues he wants to deal with on Canadian dairy and the Mexican auto industry. These are also targets of Trump’s trade imbalances.

Next week, Northern Brazil is anticipated to have strong harvest action with an abundant flow of soybeans to processors and ports that will likely pressure on a cash basis. With the potential 170 MMT soybean crop and poor storage logistics, Brazil will become aggressive amid slowing Chinese imports. Fresh interest by China in securing US corn or soybeans per early week rumors as such purchases would be used to pacify Pres. Trump and cause a pause in 10% Chinese tariffs like Canada and Mexico have not been detected.

Dry, warm weather will be across Argentina to the weekend and Monday, with more showers to break out Tuesday through Friday with rainfall totals of .4-.26 00″. The heaviest rain favors the northern half of Argentina, which has been the case for the last several weeks. A second chance of rain is indicated for the following weekend, and the third chance of showers is indicated during the 11-15 day window. In Río Grande do Sul, more regular rains are indicated along with Paraguay. High temperatures do range from the 90s to lower 100s through Monday, with more seasonal readings later in the week.

Yesterday, live and feeder cattle futures tumbled from the opening on the announcement of a potential new strain of avian flu being found in dairy cattle in Nevada. Fund liquidation was intense, with live cattle down over $5.00 at one time, while feeder cattle had seen losses of as much as $6.50 before their mild recovery into the close. Despite the sharply lower board, cash trade for the week continued with minimal losses. Dressed sales in the north resumed at $328, which was just $1 lower for the week, and live trade in the South continued at $206, which was just $2 lower. With Thursday’s closes, nearby basis in the southern plains was near $5 over the board and up $0.50 for the week but nearly $8 higher than a year ago and a record for early February. Box beef lost pricing yesterday on choice being down a $1.36 while select picked up $0.44.

The record fund length has been getting flushed since last week, while the cash market has held much better. April live cattle have major support just under yesterday’s lows (195.40, the 38% retracement of the August low to the January high), while March feeders could slip as low as 258-261 to fall into major technical support.