Grains trade turns lower overnight

After Sunday night’s mixed opening, grain futures pressed lower as the US dollar firmed, also creating a soft effect for metals and energies. Crude oil is down sharply after Saudi Arabia cut prices to Asian buyers. US oil production is at a record 13.2 Mil barrels/day, making the US the largest oil producer in the world. The South American weather forecasts were disappointing for moisture of the weekend, but the overnight weather models went for a wetter solution and sparked a new round of selling for row crops. Also, Black Sea weather forecasts are warming and reducing winter wheat stress.

The Commitment of Traders Report on Friday showed funds sold 19,700 contracts of corn (net -197,326), sold 16,396 contracts of beans (net -11,629), and sold 718 contracts of wheat (net -60,277). Managed money is now holding the largest net short position in grain positions since the worst part of the COVID pandemic in mid-2020.

Ukraine’s Ag Ministry released data showing the country’s 23/24 exports to-date at 19.4 MMT, off from 23.6 MMT at this time last year. The total includes 10.3 MMT of corn, 7.8 MMT of wheat, and 1.2 MMT of barley.

China is showing limited interest in Brazilian beans despite the recent break, with indications that China has only booked 2-4 cargoes of soybeans last week. This is well below their normal weekly purchase pace. Chinese buying needs to surface to bring stability to the soybean trade. This week CONAB and the USDA will be reporting crop production.

Weekend rainfall totals in Brazil were .25-1.50” across N Brazil, with a few locally heavier amounts. The temperatures range in the 80s to lower 90s with extreme heat mostly in Paraguay and portions of south-central Brazil where highs were lower 100s. The forecast models agree that rains will return to Northern Brazil later this week into January 18 with potential 10-day accumulations of 1.50-5.00”.

Live and feeder cattle futures closed higher last week, but Friday was well off early session highs. The negotiated fed cattle market started the week early with strength representing $3 higher trades near $175 with dressed sales at $275-276, also up $ 2-3 on the week. Late week sales on Friday pulled back to $173, which took the bloom off the board on Friday. Still, last week marked a third consecutive week higher, which had not happened since last July. Box beef values were lower last week, with choice falling $12.55, led by a $82/CWT drop in the rib primal on retreating holiday demand. The choice/select spread fell to $11.75 for the week. Estimated slaughter margins now have fallen $87/head for the week to $27, which is the lowest start to the year for margins since 2016. Live cattle February have major support at $167-168 with targets to the upside via the moving average and Fibonacci’s suggesting $174 resistance.