Argentina is building new concerns for production.

Grains are higher this morning as the recovery in price that got underway late last week continues to prompt short covering from the massive fund position that has been built up with the deflationary bias. Concerns continue to build that Argentina has remained dry since the first year and is rolling into the start of February. February/March was a key time for Argentina when their crop got cut in half last year.

China’s economy continues to be a focus. Reuters reported that policymakers will continue to try to shore up the economy by cutting the amount of cash banks must hold as reserves, as well as maintaining credit support for the economy and helping a slumping stock market (down -4% for the month).

This morning, PMI data for the EU, Germany, and Britain came in higher than expected. This firmed the euro and pressured the US dollar down below 103.00, currently trading at 102.75, which is off $0.66. US GDP data on Thursday. US PCE inflation data on Friday (2.6% expected year-over-year).

According to Ukraine’s Ag Ministry, January grain exports are running ahead of January of last year, estimated at 3.7 MMT vs 3.0 MMT. Bean demand is moving back to Brazil as their harvest gets into swing. Cash beans there have moved below $9/bu.

Weather in South America has Argentina on the watchlist. The need for rainfall is growing, especially after February 1. Rapid soil moisture losses there will occur over the next 10 days, with projected heat in the 90s/lower 100s in the southern and western producing region starting next Monday-Thursday. Only late/scattered showers are indicated across Argentina in the 11-15 day window. The key window for production and Argentina for moisture is February/March, and last year, the crop got cut in half during this time window.

A strong close yesterday for live and feeder cattle, with feeder cattle posting new recovery highs since last December’s price debacle came to an end. Box beef prices continued their advance even with harvest schedules coming back online. Choice gained $2.99, putting it back over 300 with the reported price of 301.66. $1.80 and sold for 288.38. The choice select spread is $13.28. The board implies feedlots should succeed this week, holding out for $175, looking to recap extra costs with the red verse whether they went through over the past two weeks. February cattle are targeting $175.50-176.00, with April cattle finding new resistance on a push to 179.00-180.00.