Grains turn back higher overnight.

After a one-day reprieve from the big gains seen on Tuesday, grain futures are again pushing higher today, with short covering the theme in the wheat trade. In classic style, Egypt announced yesterday that it had enough wheat for over four months and then came out with an announcement late yesterday it is seeking to buy wheat in an international tender with offers due today for early March delivery. The trade will likely be sourced through Russian offers.

The Dow closed at a record high yesterday. The US Dollar pushed down to its lowest level since July, which is favorable for money flows into commodities. Low trading volumes will continue for the rest of the week. Corn daily volume has not traded over 250K in the entire month of December.

EIA will have its weekly petroleum and ethanol production data out at 10:00M this morning. US ethanol gasoline inventories tend to build seasonally into March as your miles are driven at this time of year. Midwest cash ethanol markets also tend to score their annual bottom in December/early January. The cash ethanol market has been rather deflated since early November, and the key is whether ethanol is discounted gasoline sparks additional refinery interest. US Gulf ethanol is competitive with Brazilian origin, which, on the margin, trims imports of Brazilian ethanol into the West Coast.

In South America, the EU and GFS models have come together to anticipate rain chances in Northern Brazil in the five-day outlooks, and confidence is rising with expectations of rain shower activities for the driest areas of Brazil beginning January 1. Accumulations of 3-5” of rainfall are offered in areas of Mato Grosso, Goias, and Bahia in the Jan one-10 window. After that, longer-term guidance models allow heat/dryness to resume in Central and Northern Brazil from mid-January onward. Many climate scientists are suggesting that the risk of below-normal Brazilian rainfall is high during the second half of the growing season. This debate over Brazilian soy production will not be settled now until harvest. Early planted beans are starting to be harvested and are reporting extreme sub-trend yields. Later planted beans will improve with upcoming moisture.

The cattle trade turned mostly lower on Wednesday, while feeder cattle managed a higher settlement. December live cattle moved higher as expiration approaches, while February had resistance above $170 and pressed back lower. Cash cattle markets in the Plains and Western Midwest were untraded through Wednesday, with initial packer bids quoted steady, with feedlots in the north looking to sell will show lists $5 higher for the week following the recent winter storm.

Last week’s Livestock Slaughter and Cattle on Feed report released information needed for the December one feeder cattle inventory calculation. Estimates have total steer/heifer and Slaughter at 2.13 Mil head, while the total December 1 on feed inventory is estimated at just over 14 Mil head. December one feeder cattle supplies outside feedlots are estimated at 22.7 million head, down 5% from a year ago and at a record low. It’s also the largest year-over-year decline since 1997.