Overnight grain trade exhibits surprising strength after a lower start.

The grain trade opened lower as anticipated Sunday night, but the worst of the trading in price was over within the first minute. Soybeans found immediate buying interest, due to the fact that China’s application of tariffs to some US industries did not include soybeans again. This prompts some to suspect that there may be some form of Phase 1 soybean purchases in the future. Wheat prices recovered, helping support corn into the morning session as Turkey’s wheat crop was lowered from last season’s forecast of 21 MMTs to 19 MMTs. This may bring Turkey back into the import market after exiting last October.

It’s anticipated that today Pres. Trump will announce 25% tariffs on imported steel and aluminum, while reciprocal tariffs will be applied to numerous nations that have tariffs on the US. It’s anticipated that the reciprocal tariffs will occur either Tuesday or Wednesday. There are numerous trading partners in the world that the US works with that have tariffs on our products to protect their industries and Pres. Trump intends to end that. India is the worst abuser of import tariffs, but the EU is also included.

Typically, the announcement of all these tariffs would be negative to the grain trade, but it seems that tariffs were a foregone conclusion to be applied in November/December and that current market strength is tied to something else. This must be the expectation that there are still countries that will support US grain purchases or that China will buckle to its Phase 1 agreements that they are behind on, as they have not applied tariffs to US soybeans or corn.

Malaysian palm oil moved sharply higher overnight, up 89 ringgits to 4593 ringgits/MT. Ending stocks for Malaysian palm oil fell 28 21-month low at 1570 MMTs. January Malaysian palm oil production fell to 1.237 MMTs, with exports at 1.168 MMTs. A year ago, Malaysian palm stocks were 2.02 MMTs.

Russia’s IKAR cut its 2024/25 Russian wheat export forecast by 500,000 MTs to 43.0 MMTs and dropped their new crop Russian wheat production next demand I 2 MMTs to place it at 82 MMTs due to their lack of moisture during January.

This Tuesday is the February WASDE crop report at 11:00 a.m. Reductions in Argentine corn and soybeans are expected amid their dry January weather. Typically, the February WASDE statistical data changes are modest. Index funds are long near record amounts of corn longs, making any negative adjustments volatile.

The forecast for Southern Brazil and Argentina is wet with frequent storm systems. The first is due today and Thursday, with the second system over the weekend and early next week. If they occur, combined accumulations of rainfall for the next two weeks are estimated in a range of 2-4.50″, which will be timely for the December/January planted crops that will start to reproduce. Meanwhile, Northern and Central Brazil have started to see favorable rains below normal in the forecasts for the next two weeks to expedite harvest.

Last week, live and feeder cattle futures were again lower but have a steady outlook for this morning’s trade. Fund liquidation has been heavy and corrected from record highs with record ownership by index funds. During this time, cash price declines that occurred were minimal, and feedlots benefited from gains in basis to move cattle. Live trade in the north was $2 lower at $208, while dressed sales only lost $1 at $328. Live sales in the South were off $2 at $206.

Cattle slaughter last week totaled 584,000 head, down 16,000 for the week and 32,000 less than a year ago. The average carcass weight of 876 pounds was 47 pounds heavier than a year ago. Box beef values were lower for the week, the choice cutout gave up $3.50, and select was down $1.13. Friday’s COT report showed fund liquidation of 6005 and 35 contracts against commercial buying of 6104 contracts. The intensity of the liquidation occurred after Tuesday’s report. The first shoe dropping of a typical February break in the cattle market may have developed, with a rally anticipated soon. Still, technicals suggest further difficulties for the futures trade in the coming weeks.