Grains post a retreat heading into the weekend close.

The grain trade is lower this morning, led by soybeans as the 11-15 day Argentine forecast has rain developing after the current heat and dryness. BAGE pegged the Argy 23/24 corn crop at 56.5 MMT and soybean production at 52.5 MMT. Both estimates were slightly larger than prior reports. Corn conditions declined from 46% G/E to 41% G/E while bean conditions fell to 44% G/E from 55% G/E.

The soybean cash price in Brazil is well below the US, and not yet showing indications of a short crop. USDA weekly bean export sales were below expectations yesterday, and China continues to book Brazilian cargoes, one for March and one for May yesterday. This continues to extract overall premiums from the US market and puts a heavy retreat into this week’s rally. Brazil's soybean basis continues to weaken this week on the movement of new crop harvest import, amidst lower demand interest from China.

Beijing is anticipated to roll out additional stimulus to boost its economy and increase consumption in the next week. This week the Bank of China has cut its reserve lending rate by point 5%, granting long-term loans to property developers, and offered regulation to slow short selling in their share markets. This move had the stock market in Hong Kong rally, but it is far from certain that domestic consumption will grow with recent measures. Crude oil has rallied this week on China stimulus news.

The Northern Brazil harvested soybean yield is not showing much improvement. The recent Argentine dryness has not harmed yield potential yet further crop but the hot/dry forecast through next week is concerning. Argentina has recent sub-soil moisture improvement has allowed crops to withstand the January dryness, what will be the February and early March rainfall that will determine final yield potential. Currently, the 11-15 day forecast has a return of rain from February 6-10th with totals of .5-1.50”. Confidence in the rain is low, but it will be followed early next week.

Live and feeder cattle prices had an explosive day on Thursday to the upside with a firm start anticipated today. Higher weekly cash had February live cattle at nine-week I with April above $180. March feeders are parked just below the 100-day moving average after yesterday's strong gains. January feeder cattle expired at $232 versus $180 last year. The cash markets turned active on Thursday with higher prices in all regions, live trade in the South was $2 higher for the week at $175. In the north, live sales were quoted $2-4 higher at $175-177 with dressed trade $3 higher at $277.

The January Livestock Slaughter report showed December cattle slaughter was down 5% from November and 3% less than a year ago. The Fed cattle slaughter was down 1% from a year ago while the average carcass weight was up 13 pounds at a record 905 pounds. Live and feeder cattle have become extended and overbought on recent strength, with short-term upside targets all being achieved and moved through with slippage. The cattle inventory report will be on January 31.