Grain prices softened after overnight gains.

Grain futures pushed higher overnight on positive momentum from yesterday’s closes, with corn stalling just shy of 690 and soybeans below 1550 before turning lower in the early morning hours. GFS weather models maintain a strong likelihood that Argentina will pick up the best meaningful rains in months into January 31. Prospects of 2.0-4.50 of widespread rainfall over the heart of the Argentine growing region are developing into January 31. These rains start by Friday, but late rain showers did dot Argentine crop areas overnight.

China is preparing for its Lunar New Year Holiday, which starts this weekend and is in anticipated to be very eventful and participated after years of 0% Covid policies. The international energy agency has raised China’s 2023 crude oil demand forecast by 100,000 barrels/day of 15.9 Mil barrels since the reopening. This would raise world crude oil demand to a record large average of 101.7 Mil barrels/day.

Grain futures have seen index fund participation pushing money into commodities since the release of the USDA crop reports on Thursday. Open interest has risen over the last several sessions, putting the elevated prices at risk if rains develop this weekend as anticipated and carry through early next week in South America.

Live and feeder cattle prices closed mostly lower yesterday, but a late recovery in live cattle helped mitigate losses. As typical for Tuesday, cash trade was at a standstill, with the early week outlook steady on sluggish cash beef trade. Box beef values were modestly higher on Monday, but those gains were reversed on Tuesday. Yesterday choice cutout was off $0.77, and the select was lower by $2.02. This Friday is the monthly Cattle on Feed report, with On Feed estimates at 96.7% of year ago, Placements are put at 91.1%, and Marketing’s at 94.7%.