Grains decline further overnight from Monday's losses.

This morning’s grain trade is mixed with corn and wheat softer, while soybeans are trading firmer after pushing new calendar year lows. Chinese/Asian demand that has slowed along with ongoing managed money selling of grain futures continues to be the main driver. Yesterday’s Hong Kong Ct. ordering the liquidation of China’s largest property owner, Evergrande Group (a $200 billion entity), keeps the market concerned about reduced Chinese demand.

China’s 10-year government bond yields fell to their lowest level in 22 years at 2.5% yesterday. The Hang Seng Index fell 2.5% on Wednesday. These economic concerns out of China and SE Asia are part of the overall deflation hanging over grains as we head toward the start of the February Insurance Pricing period for corn and soybeans.

Peak Trading Research noted that it is rare for funds to be this short of soymeal, and prices are likely to rise in the coming weeks. Meal is a managed market like ethanol, and the soymeal calendar often inverts and squeezes shorts.

Several winter wheat producing states gave crop condition reports. IL, KY, KS, and NE made significant improvements while TX and OK were down, but they are well above last year at this time. Regular USDA Crop Progress Reports will resume in April.

FOMC Meeting today and tomorrow. The US macroeconomic environment is positive ahead of the Fed announcement tomorrow, with stock futures into all-time highs, respectable crude oil prices, and global bond yields lower. The Fed is not expected to adjust interest rates at this meeting. Bonds are pricing five Fed rate cuts in 2024, starting in May. Dovish comments from Chairman Powell are desirable for Ag futures and would drive the Dollar lower.

The South American weather pattern remains stuck with Argentine and southern Brazilian rainfall, having stopped mid-January, and is now unlikely to see a return of rain in the next 10-12 days. The extended 10-day stretch of hot/dry weather is ahead for Argentina and Southern Brazil, with extreme heat adding to crop stress during the next 7-8 days. Temps will be in the mid-90s to lower 100s. Shower chances do not show up to the last half of February, and even then, the rains do not look meaningful in the EU or GFS extended range solutions as of this morning. Meanwhile, Northern Brazil rainfall is forecast to be near-normal with totals of 2-5.00” through February 10, with high temperatures in the 80s and the lower 90s. Soybean harvest is advancing in northern Brazil.

Live and feeder cattle futures had early strength that was challenging or besting last Friday’s highs and then reversed sharply and closed near the lows of the session on Monday. Follow-through selling is expected to date, as hedging and profit-taking likely arrived early ahead of Wednesday’s Cattle Inventory Report out at 2:00 p.m. CT. As is typical, the cash markets were quiet again, but feedlots are looking to build on recent momentum and rising slaughter margins. For now, the early week outlook is firm ahead of the data on Wednesday, with active trade expected towards the end of the week. On Monday, box beef values had seen choice down $1.11, and select was lower by $0.31. The CME has again jumped ahead of the cash market, which stalled Monday’s rally.