The first trading day of the month starts grains out soft.
Grain futures are softer to start the month, as moisture is starting to fall in Argentina, as forecasted into tomorrow before a drier stretch occurs. The trade is waiting on a decision on the Egypt wheat tender today, which will be financed to the World Bank for February/March shipment, but it is highly anticipated that Russia will capture the deal in the $304-305/MT range.
OPEC members are expected to stick to the current production policy in today’s virtual meeting. OPEC in November cut production by two Mil barrels/day to balance the 2% fall in world demand. OPEC is trying to support the crude above $80/barrel on a Brent oil basis. The Federal Reserve makes their announcement today on their interest rate hike with .25% highly anticipated to get the Fed funds rate to 4.50-4.75%. The trade will be watching the communiqué that comes out after the rate hike to see if the Fed implies several more .25% up just as to the upside in the March and May meetings.
China is rumored to have bought 5-7 cargoes of Brazilian soybeans yesterday for April/May. Brazilian fob soybean premiums continue to sag, with April/May offers trading at some $0.80 a bushel under the US Gulf.
Showers are starting this morning in Córdoba and Western and Northern Buenos Aires. The system is expected to pull northward, with additional shower chances to occur overnight slowly. The Argentine forecast is rainfall totals ranging from .25-1.25 inches, with a few locally heavier amounts in central Argentina. After this, a lengthy period of dry weather follows with the next chance of rain until the 10-14 day model with the new frontal pass. The EU and GFS models agree that rain will return in the two-week timeframe, but rainfall details vary.
Live cattle are called mixed, while feeder cattle are called higher this morning on yesterday’s Annual Inventory report. All cattle and calves were down 3% versus a trade guess of down 2.7%. The beef cow herd was down 3.6% versus the 3.8% estimate. But heifers held back for the cow herd were down 5.8% versus a guess of 3.3%. Asking prices for catalyst week remain offered at $158 while box beef values were sharply mixed yesterday, with choice down $2.01 while select tightened $1.40. The choice/select spread is historically tight at a $13.17 choice premium.