The grain trade is mixed for Wednesday morning start.

The overnight grain trade proved two-sided as early strength faded in the night, but by morning, corn again was challenging new session highs, with wheat following on a delayed Turnaround-Tuesday style. Typically, when grains are weak to start the week, there is a mid-week bounce before resuming selling if the negative trade is maintained. This would imply weakness into the first notice day this Friday for all March contracts.

The grain trade is also preparing for Thursday morning’s release of acreage thoughts from the Ag Forum by the USDA. The initial average trade estimates for corn are 93.6 million acres, soybeans 84.4 million, and wheat 46.7 million. They will then apply trendline yields, which have not been achieved for six years for corn, to predict their production levels and make guesses on carryout’s. Recall they are currently producing a carryout that is 700 Mil Bu less than what they said last year at this time. The Ag Forum data will create headline movement in price but will not be considered the reality of the coming growing season; it is just a baseline. The March 31 farmer Acreage Intentions report will be the focus.

Pres. Xi is urging his party officials to stay calm on the increased political pressure from Pres. Trump. China is now seeing US investments in key sectors like energy, tech, and farmland being banned, while Mexico is also urged to apply tariffs on imported Chinese goods. This week, we have now the added fees on Chinese vessels entering US ports and demands that more US goods head to China be carried on US-flagged vessels. These added US regulations and fees are putting heavy pressure on China, which has a weakening economic outlook. This will lead to talks eventually, but they will be arduous as China’s ag import demand is currently in retreat, while at the same time, China wants US high-end computer chips that Pres. Trump is now banning it.

Kansas has now joined Ohio in requesting a 1-year delay in expanded E15 year-round ethanol sales. The impact on E15 will be modest during the 2024/25 copier on expanded US ethanol demand. Meanwhile energy prices keep sliding as China’s economic outlook continues to remain dim along with the US efforts to project increased oil production.

It appears there will be soaking rainfall across Argentine’s main crop growing areas as flooding risks look to increase in early March. Temperatures will now cool to seasonal levels under cloud-filled skies. Rain will benefit crops today, but close attention will be on the forecasts as flooding could become a problem after March 5. There are forecasts of 6-9″ of rainfall in some areas. Meanwhile, Río Grande do Sul in southern Brazil will likely see yield reductions and falls in corn/soybean production as rainfall has not been as forecasted, possibly pulling total Brazilian soybean production closer to 170 MMTs, from private forecasters who are in the 171-172 range.

The cattle market found further follow-through buying on Wednesday after the strong performance produced on Monday. April live cattle stopped shy of the 50-day moving average, while feeder cattle had seen further gains of another $2. This morning, a firm start is anticipated, but a mild correction would not be out of line given recent strength. Meanwhile, the negotiated fed cattle trade has initial asking prices in the South quoted at $ 200 or more; again, sales last week of $199. The outlook is steady, with the February cattle contract trading at 199.35, which expires at the end of the week. Choice cutout on Tuesday picked up $0.59 and was at $ 3.55 above last Friday’s close. The select value picked up $0.16 on Tuesday, and the choice/select spread remains seasonally strong at $10.19/CWT.

The February cattle contract will expire this Friday, but it is $1 under last week’s cash trade. The rest of the cattle market is trading well under recent cash quotes. April is $5.00 compared to $4.00 over a year ago. Summer and fourth-quarter cattle contracts are significantly discounted but aligned with the 10-year average for late February. Bull markets climb a wall of worry, which will be the theme in 2025. Seasonal trends start to pick up in late spring but given the high prices that the market is already trading at, it keeps the live trade fearful of the future and offers severe losses if hedged, given current outlays for feeder cattle. Hedges are only in place to protect against a broader unforeseen Black Swan decline. This makes options strategies or LRP’s more desirable for protection.