Grains trade mixed overnight.

Grain futures overnight had seen wheat find some minor support from the Arctic weather scheduled for the Black Sea area along with the Central US next week and the potential stress it brings to the wheat crops. Meanwhile, row crops bled lower on the ongoing expectations of improved South American weather for Northern Brazil. Crop damage in the last four months from the acute heat and dryness will still produce further cuts in soybean production, with many analysts now holding in towards 149-152 MMTs, which brings support to the soybean trade in the lower $12.00 range.

US export sales did report low sales data, which is seasonally expected this time of year, but they were certainly at minimal numbers that should start to find a bid in the recent price weakness of this week. Corn export interest from the US typically picks up now and into the second quarter as the availability of corn around the world is pretty much limited to the US export market, and whatever can be removed out of Ukraine without now having to incur the extra cost of going around the Cape Horn of Africa.

This morning’s January jobs report came in at 3.7% versus a guess of 3.8%, and the jobs number was well above the average estimate of 170,000, producing a print of 216,000. This had the US dollar firming again this morning by another half a percent to 102.67, with metals and stock indexes softer while energies maintained overnight strength. Rate cuts will not be on the plate for the Federal Reserve any time in the first quarter nor likely into the second quarter if we see this again in February.

Index fund rebalancing of commodity positions starts on Jan 8th (at the close of each session). The impact on CBOT grain futures is thought to be modest. Index fund ownership in US ag futures is now at its lowest level in 17 years at a total of 590,000 contracts. This is down 50% from the high set back in late 2022. There is not much fund index length in the ag trade to liquidate. Next week January’s Crop Report has some thinking there will be yield bumps for the final crop production data that is called for the January Crop Report but will still be revised five times in the next two years.

South American weather models maintain the monsoonal rain forecast for NC Brazil into mid-January. Widely scattered showers will dot North Central Brazil daily with accumulations of 1.50-6.50”. Heavier amounts will occur in Bahia and Minas Gerais. High temperatures range in the 80s to low 90s, while southern Brazil and most of Argentina will be dry today with better showers for Sunday and next week.

Live and feeder cattle again corrected yesterday the early week gains, this is following higher cash trade in the north while southern markets remained quiet. Packers reportedly bidding cattle at $172-173 while asking prices remained at $175. Box beef values again were lower after the drop from post-holiday demand. The choice was lower by $2.13, with select down just a penny. The choice-select spread is quickly narrowing, losing more than $one to this week.

The EU model shows heavy snowfall across large areas of the cattle-feeding country next week, with the heaviest amounts of up to 18 inches blanketing the Eastern third of any, with 12-15 inches projected for much of IA and for S MN. Large areas of KS and SD are projected to see 8-10 inches. Bitter cold temperatures follow the snowfall, with overnight lows dropping below 0° in the last half of next week. This will put stress on livestock, which has not been experienced this year, and cattle feeders will be looking to offset stress/weight loss with higher cash prices in the coming weeks.

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