The morning grain trade is softer on follow-through selling from yesterday’s poor close.

The morning grain trade is softer across the board, following yesterday’s lower close on a February WASDE crop report that did not show the minor cuts in carryout that were anticipated. February bears are in place for seasonal weakness, with even the CPI data out this morning showing inflation up ticking above estimates, causing the stock indexes/metals/energies to move sharply lower this morning.

Massively large index longs in corn and mild longs in soybeans are at risk of liquidation, as friendly news could be fleeting for price in the short term. China remains quiet, while the US trade representative nominee has stated he will be enforcing Phase 1.

The wheat trade is trying to find support from cold temperatures that reflect this morning's single digits across Oklahoma, Kansas, Nebraska, and Colorado, with minimal snow cover. The problem is winterkill is impossible to quantify, and this isn’t the 1st pound of bitter cold/absent snow cover. Even the Black Sea region will experience more of the same in the coming week.

The recent dryness that’s finally developed in Northern Brazil is accelerating soybean harvest and safrinha corn planting. Modest premiums built are starting to shed as harvest is now full speed. Meanwhile, actual yield performance in Argentina, with an early corn harvest to begin in the next 30 days, will be watched along with Brazil’s climate pattern in March and April, given the delayed plantings of their winter corn crop.

Major forecast models remain consistent in projecting below-normal precipitation in northern Brazil into March 1, which is conducive to their soybean harvest. Soaking rainfall now looks to remain across Argentina, Paraguay, and the southern portions of Brazil in Río Grande do Sul. The coming mix of rain and sunshine will be ideal for Brazil in the short term. Mato Grosso do Sul in Brazil is where net soil moisture losses continue, but it is a small portion of total production.

Another sharply lower close yesterday for live and feeder cattle futures. Feeder cattle were off $5.00 or early in trade and closed down $2.5-3.0 amongst the contracts. Liquidation from index funds that had seen their position go to record size last week have turned sellers on any modest 1-2 day rally to continue offloading their record position. The negotiated fed cattle market was quoted at $203 in the South, which would be $3 lower for the week but still more than $3 over the close in February futures. The overall sales volume was light, leaving more business to be done later this week. Cattle markets in the north remained quiet. Box beef on Tuesday had seen choice off $1.04 at $322.46 while select was off $1.71 at $312.21.

Yesterday’s February WASDE report estimated Q1 beef production at 6,660 Mil pounds, up 1% from last year, with the quarterly average steer price of $205 versus $181 a year ago. Q2 production of 6,710 Mil pounds was down by 1% to a 5-year low. The second quarter average steer price was projected at $200 versus the CME cash equivalent price this week at $199. The cattle market has fallen back to value on recent corrective pricing. Yesterday’s pricing had seen April live cattle retreat to 38% retracement value, along with April live cattle and March feeder cattle touching 50-day MA moving support numbers. Futures are oversold and it’s imperative that a rally try to develop, otherwise the break can spiral April live cattle down to 192 for the next major support level, with March feeders needing the long-term 258-260 chart support values. Index fund technical selling has been relentless, and it will be interesting how today’s negative stock market reaction to the CPI transfers over the cattle trade today.