The grain trade had a volatile evening session.

The grain trade opened higher last night following news that a Federal Trade Judge blocked President Trump's reciprocal tariffs, stating he did not have the authority to implement them. The White House has already appealed the ruling to the Appellate Court and has the option to take the case all the way to the Supreme Court. There are also other trade mechanisms the President can use to maintain the current tariff structure, even beyond the court’s 10-day window for removal.

Despite the initial reaction, the overnight grain trade gave up early strength and moved lower as the news was viewed as almost a non-event. The market focus quickly shifted back to export competitiveness. Argentine corn, Brazilian soybeans, and Russian wheat are currently priced below U.S. Gulf offers. Argentine new crop corn is being offered at twenty cents below U.S. values, while Brazilian corn through December is priced about ten cents under Gulf offers. The grain market is now struggling with export competitiveness, a problem that was not present just thirty days ago.

Soybeans are now at risk of joining corn and wheat in a technical washout. The 200-day moving average is under pressure, and if it is broken, it will lose its technical significance. This could trigger additional snowball selling by index funds, which are already heavily short in corn and wheat, and may also increase their short positions in soybeans.

From a fundamental standpoint, most attention remains on weather, particularly the continued wet conditions in the Eastern Corn Belt and now also in the Dakotas. There is little doubt that weather has already impacted U.S. production, but traders are hesitant to make major position adjustments until the scale of the damage becomes clearer. Globally, weather is also a concern, especially in Argentina and China. In Argentina, excessive rainfall has impacted the soybean crop, and some analysts have already begun to lower yield expectations, which is helping to support the soy complex. In China, heavy rains have arrived in previously drought-stricken areas. While the rain may be too late to salvage the wheat crop, it is expected to improve soil conditions ahead of corn planting, which is already underway.

The cattle market came under pressure again yesterday, marking two consecutive down sessions this week following what was viewed as a neutral to friendly Cattle on Feed report on Friday. Outside market action may support a steady start today. A few cash trades were reported in Kansas at $220, steady with last week's levels. However, there is a sense that the cash market could trend steady to weaker this week. Boxed beef prices were generally higher yesterday, but packers continue to face heavy financial losses. There is now talk that some large packers may temporarily close one or more plants to stem the bleeding, forcing higher boxed beef prices and reducing procurement costs by tightening supply.

Futures remain heavily discounted relative to the cash market, which limits the risk of a dramatic breakdown on the board. However, volatility is likely to emerge in the cash market itself. Just as the cash market was able to climb $5.00 in one week, it could give that back just as quickly. Seasonally, a downturn in cash cattle prices is typical for this time of year. Meanwhile, discussions with Mexican officials are ongoing as they work aggressively to reopen the border under improved protocols and updated importation rules.