The grains are declining again after a two-day rally.

Grains moved lower overnight as corn set the pace, scoring a new fresh three-year low. Rain fell in abundance overnight across the south-central Buenos Aries in southern Argentina, which added to the bearish sentiment. AI momentum funds are pushing values lower to see if the market has the ability to push back. Meanwhile, farmers in the US and South America remain tightfisted, slowing any acceleration of the decline.

Monday’s open interest for corn fell 21,673 contracts, implying long liquidation. The Goldman Role fund starts Thursday, and front running the roll has pushed out corn spreads and likely sparked liquidation.

Several meteorologists noted that global weather is expected to transition from a strong El Nino to La Nina in the later half or final quarter of 2024. It is too early to predict the intensity or impact on crops. If La Nina is realized, it could reverse the weather effects seen this year.

Soymeal exports have been a record, even though the meal has experienced a dramatic price decline. This is because the export window has closed mostly, with Brazil’s 48% soymeal offered at $10 over March futures compared to $50 over for the Gulf. Argentine soymeal becomes available in late April through June, dramatically slowing meal exports. In the meantime, soy oil is a new bullish story, with the oil share spread to rise to the 45-46% level in early spring. The CBOT spot crush is at 90.5 cents, with the oil share currently at 39%.

The February WASDE Report is on Thursday, with small changes expected to the US balance sheet. Analysts expect a raise to the Argy bean crop and a cut to the Brazilian crop. Fresh demand will develop next week, as China will be taking off their Lunar New Year holiday while the rest of the world waits for the USDA/CONAB and Statistics Canada report out on Thursday. Surprises can develop in the coming months as the true crop size becomes known, with a historically wide array of Brazilian soybean crop estimates circulating in a range of 135-159 MMTs (880 Mil Bu). February bears typically set the winter low by Valentine’s Day, and a spring price rise typically is underway as we head toward the March 31 acreage report.

In South America, showers and storms are expected across Argentina nearly daily for the next 10 days, with rainfall totals ranging from 1-3.25”. Meanwhile, Argentina and S Brazilian forecasts maintain heat in the next week. High temps range from the 90s to lower 100s, with the northerly locations enduring heat of 99-104°. Moderation of this warmth occurs early next week, but there are hints of extreme heat returning in the 7-12 day forecast. For now, the extreme heat occurs with rain in the forecasts.

On Tuesday, live and feeder cattle pushed sharply higher, posting strong gains with a steady/better outlook offered this morning. April live cattle pace the advance when it cleared the 200-day moving average for the first time since early November. March feeder cattle closed above an open chart gap that was left following the October Cattle on Feed report.

The current rally in feeder cattle prices started as the cattle/corn spread bottomed in December and has rallied non-stop cents. From the mid-December low, the nearby cattle/corn spread has gained $186/head or 13% as corn prices eroded in cattle found a low. In this time window, the feeder cattle index has rallied $21/CWT, which is 10%. Negotiated fed cattle are still at a standstill, but early asking prices are now quoted at $181-182 in the South, which is $3-4 over last week’s average prices. April live cattle have gap targets the upside at $187.50 and then $190.00.