Overnight grain trade remained soft.

Grain futures retreated overnight as wheat continues to slip, while corn and soybeans retreat some of Wednesday’s gains as trade continues to remain thin. Trading desks are not yet fully populated and will likely not occur until next Monday, when we start the first full week of the year. Next Friday, January 12, is the USDA Crop January Crop Report, which will bring about renewed trading volume.

The US dollar has strengthened 2% in the last several sessions, as yesterday's Fed minutes indicated high uncertainty around rate projections and the number of cuts expected in 2024. Most agreed to keep policy restrictive for longer to continue to work towards the goal of 2% inflation. How the Dollar moves in relation to other currencies will be important for beans and other Ag exports. Both the Real and Yuan are weak compared to the Dollar.

The sharp drop in soybeans that started the year left an open chart and also created a break below the October harvest low in the soybean futures. This is a negative without the ability of the market to overcome 1300 quickly. Soybean short positions are starting to materialize by the index funds, and this is starting to develop their first short position since the pandemic of 2020.

The overnight weather forecast went even colder for N Ukraine and Russian winter wheat areas over the next 10 days. It’s been years since the Black Sea wheat has endured such arctic cold, with wheat winterkill becoming the conversation. Even the Central US will have an arctic chill late next week with heavy NC Midwest snow producing transportation snarls. Winter is arriving now in the US, and livestock productivity will slip for the first time via weather next week.

Large areas of N Brazil that have been dry have received rainfall, but some areas of northern Brazil still struggle with the drought. Weather models agree that the normal monsoonal rain across Northern Brazil will try to continue into mid-January. Widely scattered showers dot north and central Brazil daily with rain accumulations of 1.50-6.50” with heavier amounts favoring NE Brazilian crop areas of Bahia and Mina Gerais. High temperatures are maintained in the 80s to lower 90s.

Live and feeder cattle futures closed mixed on Wednesday after morning weakness that consolidated Tuesday’s gains. After losses of several dollars and feeder cattle early, the markets closed near their best levels. Fear of the cold and snowy plains weather for next week is offering support. Meanwhile, cash markets and the plains did turn active in the north on Wednesday, with a higher price trend developing.

Live sales were quoted at $175, which was $3 higher than last week, and the dressed trade developed $2-3 higher at $275-276. More business is expected today with similar price trends. Every live cattle is targeting 174-175, which is near the 50-day moving average and 38% retracement of the November collapse. March feeder cattle have similar targeted resistance at 231-233.