Grains to soften overnight, on potential Black Sea moisture in two weeks.

After a firm/higher start in the grains overnight, selling entered shortly after and continued throughout the night. Selling pressure is tied to the European weather model suggesting some moisture moving into the Plains in the 12-14 day window. The market is highly sensitive, so they sold even though AI/GFS and Canadian model forecasts remain dry for the Plains for the next two weeks. There is some potential rain developing for the Black Sea weather in the longer-term models, and the markets focused on that.

USDA Sec. Brooke Rollins indicated that a big announcement is coming for US agriculture soon. Sec. Rollins is working on trade compensation packages for US ag that involve section 32 spending authority in the Agricultural Act of 1935, to use funds to enhance domestic use and or/exports to reestablish farm purchasing power. Exactly what domestic policy could be used to boost farm income is unknown.

USTR will hold an open forum today and tomorrow on China’s growing dominance in ocean freight and proposed US port fees could reach $1.5 million per vessel. The USTR is expected to hear how disruptive their proposal is to US ag. Representatives from the North American Grain Association, the American Soybean Association, the US Ag Transport Coalition, and others are set to testify today and Wednesday. Since US ag export profits are often razor thin, the tax will be extremely harmful to US exports. There have been rumors the Trump administration will push any decision forward to November amid the industry outcry. At a minimum, the trade expects the initial USTR proposal to be watered down and phased in over time, allowing all US transportation sectors to adjust.

The Black Sea weather forecast offers some rainfall potential beyond April 2, with some needed rain for SW Russia/Ukraine, with probabilities of .25-1.25″ of rain potential. The rain will be timely, but much more will be needed to alter the prevailing soil moisture trends. This area endured a snowless winter, and the spring weather forecast into mid-April maintains a trend of below-normal rainfall. It always rains in a drought, just never enough is the adage, but the forecast of hope is always traded. The Plains winter wheat holds an arid weather trend, with heat emerging in Texas/Oklahoma.

Last week, cattle and feeder cattle futures saw strong gains, but a massive reversal occurred from new contract highs and turned lower into the close on Friday. The COF report was considered friendly for feeder cattle, with placements at 82%, nearly 4% below the average trade guess. Indications for this morning’s opening are for a firmer start.

Last Friday’s negotiated fed cattle market had record-high prices in all regions. Live sales in the South were $7 higher at $210, while dressed sales in the North were quoted $10 higher for the week at $335, with live sales $8-9 higher at $214-215. Box beef values had choice gaining $7.18 last week, with select picking up $3.30. The commitment of trader’s report showed that the week ending March 18 had funds buying 7,349 contracts against commercial selling of 5,692. In feeder cattle, funds bought 1013 contracts against commercial selling of 915 contracts. Funds are again holding a record-long net long position.