Soybean oil leads to mild soybean strength overnight.

This morning’s grain trade is mixed, with soybean oil showing strong gains and supporting soybeans. Palm oil pushed to new yearly highs, and yesterday’s oilseed crush report showed stocks lower than expected. Meanwhile, wheat futures softened as European wheat trading returned, and US wheat crop ratings are promising.

Crop Progress showed winter wheat conditions 56% G/E vs 57% G/E expected and compared to 28% G/E last year at this time. HRW wheat conditions are near the best levels of the last 13 years for April, while SRW wheat conditions are the highest of the last 12 years for April

The USDA Monthly Oilseed Crush Report showed February's US soybean crush lower than expected at 193.9 mbu (196.4 mbu exp) but still well above February 2023’s 176.9 mbu and a new record. US soyoil stocks were lower than expected at 2.146 billion lbs. USDA Monthly Grain Crushings showed February corn used for ethanol up sharply from last year and a new record for the month, and January was revised higher.

Record gold prices and rising oil prices are starting to throw support into the grain market. Spot crude oil has pushed above $85/barrel overnight for the first time since October on the continuing rising Middle East tensions and China’s improving economy. Also, strong nearby refinery demand anticipates Wednesday’s crude inventories finding a draw on the DOE numbers. Investment flows in energy and metal are now looking for cheaper commodity sources to buy into. The big short grain trade with the index funds may be past its apex, with funds looking to reduce that possibly. History says that in six months, they could be long grain.

Bond markets are now pricing in only two Fed rate cuts in 2024, with the first to occur in September (a hawkish shift that is supportive of the Dollar).

The US Central weather forecast presents a complex picture, with the northern and southern branches of the Jet Stream vying for control. This week, the Midwest can expect stormy weather, but there are promising signs of improved rainfall chances for the Plains after April 10. In the next 48 hours, Wisconsin and Michigan are likely to see snow accumulation of up to 8.00”. The forecast for week two indicates that the Midwest will experience highs in the 60s/70s, creating a favorable weather window for spring planting after April 12.

Live cattle futures were pummeled during the last half hour of trade on Monday as news surfaced that a person in Texas contracted H5N1, along with additional positive tests in dairy herds. A person in Colorado tested positive back in 2022 for H5N1, so the Texas case is not unprecedented. The individual who tested positive essentially had a case of pinkeye and was treated with an antiviral. How this plays out in the marketplace this morning will be interesting, but the news is likely overblown allowing for a recovery in futures pricing today.

Yesterday’s negotiated cash markets again were quiet, with packers targeting lower cash values, and hedge feedlots would likely sell $2-3 lower bids with the ability to pick up a few dollars on a basis. Last week, Packers bought 63,695 head on a negotiated basis, with 51,005 for a 1-14 day delivery and 12,690 for a 15-30 day delivery. This was the lowest volume in 10 weeks. Cumulative negotiated purchases for the year are down 8% from last year and 936,937 head, the lowest since USDA began reporting the data in 2003.

June live cattle are back under the support of 176.50 and need to recover above this today immediately or risk testing the 62% retracement value of the December low, which is at 172.00. The industry fears that US beef exports could slip should bird flu be confirmed in feedlots.