The grain trade retreats from Tuesday's gains.

This morning’s grain trade is lower as disappointing economic news out of China ahead of today’s US central bank meeting conclusion brought about renewed selling interest from the heavily short index funds. China reported that its manufacturing activity slumped for the fourth consecutive month, with its PMI reading for January at 49.2. This was up from December’s 49.0 index but below 50, which is the measure where manufacturing activity is expanding.

The FOMC Meeting concludes today. The Fed is not expected to adjust interest rates and leave the Fed funds rate at 5.25-5.50%. 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 EU Commission proposed an “emergency brake” that will allow tariffs on Ukraine commodities to help appease EU farmers. Other measures will loosen restrictions on EU fallow farmland and allow EU governments to levy temporary restrictive measures if there are increases in Ukraine commodity imports. Shipping sources indicate that Ukraine’s maritime shipping of Ag products in January will drop to 3.8 MMT from 6.1 MMT in December.

Russia’s Ag Minister is upping the 2024 harvested area by 300K hectares to 84.5 Mil hectares, which translates to 208.7 Mil acres. He estimates December crops are 96% in good to fair condition, similar to last year. The wheat crop sector is ranged in the 88-92 MMT range, with spring and summer grain seedings depending on April/May weather conditions.

The South American weather forecast is slightly wetter beyond February 9, with scattered showers for Argentina. The dry weather pattern currently holds across the Southern fourth of Brazil and Argentina for the next 8-9 days. Extreme heat ranges from mid-90s to lower 100s. The shower chances in the forecast order on February 9 and linger into February 13 where another dry spell appears in the 15-30 day model. The rain forecast remains quite confident for Argentina in the ninth through the 13th for showers, but the rains in the forecast still remain patchy.

Live and feeder cattle dipped in the early portion of the session on Tuesday and moved higher throughout the day, with another steady outlook offered for today. The USDA’s Bi-Annual Cattle Report will be released after the close. The herd is widely anticipated to be down at least 1.5% and just under 88 million head. Box beef values slipped on Tuesday, with Choice losing $3.35 while Select declined to $1.77. The choice select spread narrowed to $9 9.02 choice premium.