The grain trade starts the week firm after a 3-day weekend.

This morning’s grain trade is firmer across the board as the Chinese have returned from holiday and are actively pursuing Brazilian soybeans. Brazil’s cash basis is now firmed even further from last week, with premiums rising by $0.50 during harvest. On Saturday, navigation on South America’s Parana River has been halted for large vessels due to a ship carrying wheat running aground and obstructing the main waterway. The extremely oversold nature of the grain trade also supports the rally, as the cheapest and most oversold Ag markets include corn, KC wheat, soybeans, and soymeal.

The USDA has confirmed that EPA administrator Regan will join USDA Sec Vilsack in attending the Commodity Classic in Houston on March 1. This is also the day that the EPA/Biden administration will update the GREET model used to measure the carbon intensity of US biofuels. This update is critical to the ability of ethanol/renewable diesel to qualify for new tax credits for sustainable aviation fuel (SAF). The SAF tax credits are sizable and will be the key to ethanol’s demand pivot from auto to aviation fuels. It’s anticipated that EPA’s Regan would not have been joining the Sec. of Agriculture if the update had been adverse to US agriculture. It is an election year, and Biden needs the support of America’s agriculture through his green fuel program, which received large monetary support from the 2020 Inflation Reduction Act. This news helped rally soil and corn overnight.

There are also rumors that the Biden administration is going to allow the sale of E15 year-round in 2025 for the Midwest states that requested the waiver. It was hoped that the E15 waiver could still start in 2024 but will be pushed back to early 2025. A final announcement is expected from the Biden administration sometime in March.

According to a statement from the People's Bank of China, China cut its five-your loan rate by .25% to 3.95%. This narrowed the spread between the one-year to five-year lending rate to .5%, the narrowest in decades. The interest rate cut was seen as trying through policy in China’s ailing property sector. It is not mortgage rates that are the problem in China, but the sagging property values. Restoring investor confidence and likely lower lending rates will take time to underpin China's sagging property market.

In South America, below-normal rainfall is forecasted across Argentina for the next 10 days, with the long-range 11-15 day forecast offering improved rain chances. The week ahead will be largely dry across Argentina, with a few light showers focused on far Western growing areas. A frontal pass early next week produces scattered showers focused on Northern Argentina. The southern half of Argentina stays dry. The last 3-4 days of the month are also arid before a secondary cold front occurs during the opening days of March. As in the past, the 11-15 day forecast models have been too wet for Argentina throughout most of February.

Live and feeder cattle finished last week right on their highs, with a firm outlook offered for the start this morning. April cattle marked the best close since early November, while March feeders had their highest settlement since mid-October. Last week’s negotiated fed cattle trends were mixed with softer prices in the South and firm prices in the North. Northern cattle sold for $180-182.50 which was steady-$2 higher, while dressed sales were a dollar on either side of unchanged at $287-289. Live sales in the South were down $2 for the week at $180. The early week outlook is steady. Cattle slaughter last week totaled 608,000 head, which is down 14,000 from the previous week and 17,000 head fewer than last year. Cumulative slaughter for the year is now 6% behind last year and the smallest in six years. Box beef prices were higher for the week, with choice up $2.16 and select gaining $1.58 higher, which are both at record seasonal prices. April live cattle have a chart gap above $190 that has now become a technical target.