Corn and wheat softened from yesterday's rally due to the Putin threat.

This morning’s grain trade has corn and wheat drifting from yesterday’s explosive lift, after Pres. Putin, mid-morning, threatened retaliation against Ukrainian ports if a drone attacked another vessel carrying Russian oil. This has put some focus back on the potential Black Sea grain export shortfalls. This will cause shippers to avoid the region and limit commodity flows if Black Sea fighting escalates near ports. This would, unsurprisingly, bring more US export demand back into play.

Next week, we will get another WASDE update on Tuesday, but it will not include crop production; it will only cover supply/demand numbers. That will not occur until January, when they do their supposed “final” crop production number, which will be adjusted several times in the years to come. Month, quarter, and year-end will start to become primary factors in price discovery as we get closer to the end of the year.

Interestingly, we're now seeing some analysts trimming Brazilian crop forecasts, with some near the USDA’s 175 MMT forecast. It’s also interesting to see that some projections have also fallen below last year’s 172 MMT number.

The US dollar has been softening and is back below 99.00, ahead of next week’s Federal Reserve meeting. Given the recent softening in the US labor market and layoffs, the odds of an interest rate cut are up to 88%. While this seems positive, rate cuts in a shrinking labor market are not particularly good for the economy in the long term. A minor portion of the job market is due to government positions that were eliminated in Washington over the past summer.

This morning the market awaits with rumors that China had booked 4-5 cargoes of beans overnight. The shipments are likely for the January/February window. If the shipment announcement is below 500,000 MMTs, the market will read it as disappointing that China will be woefully behind in securing 12 MMTs by December 31. What the market does not know is how much of its purchasing is occurring in the futures markets, which will be revealed when China meets with its trade representative counterparts. No deal has actually been signed; we are working on the goodwill of China, following trade talks held in October and announced at the end of the month.

Cattle futures gapped higher yesterday, with feeder cattle sharply higher, touching limit up briefly before retreating modestly. A significant jump in the feeder cattle index, putting it over 330 prompted the reaction. The significance of last week’s low and new friendly inputs is helping drive a sharp recovery, with feeder cattle as of yesterday recovering $25 from the low made a week ago Tuesday.

Negotiated live trade is starting to see initial offers develop in Texas at $225, which would be $7 higher than last week, but the dropping box beef values are not helping. Yesterday afternoon’s finished box beef numbers had choice cutout off $4.17 at $365.72, while select tumbled $7.10 at $350.78.

February live cattle traded into resistance yesterday at 221-222, while feeder cattle have resistance at 331-332. Consolidation of recent gains will be the order of the day today.