Grains are fading after overnight strength, even though the US dollar is breaking below 97.00. Typically, this is a supportive event.

This morning, the grain trade is fading from last night’s early strength, as the US dollar tipped lower and metals surged to phenomenal new all-time highs, with gold now well above 5000 and silver challenging 10.00.

Metals are ripping higher this morning as traders flee crypto and pile into safe-haven assets. Gold is up over $110 and silver nearly $8. Other precious metals are also surging. The US dollar has dropped to a five-month low, boosting US export competitiveness, as a weakening dollar typically does.

In Ag, the dollar drop is supporting prices, along with building concerns over South American weather. Dryness in Argentina is worsening, with a notable drop in soybean crop ratings confirming the stress. Again, rain is always in the forecast; the question is, will it actually fall?

Geopolitical risk remains elevated and is back in focus this week. Month-end positioning will also be a driver, especially with several winter storms that have moved across the US. Basis has firmed at several locations amid slowing logistics.

Pres. Trump will be in Iowa on Tuesday to do some campaigning ahead of the midterm elections in November. Trump is expected to visit an Iowa ethanol plant, and it would be helpful for him to express support for E15, which is currently not in the budget bill that Chuck Schumer has sworn to hold up this week. He wants funding for ICE to be removed in light of recent enforcement actions.

Cattle futures did close higher last week, but did not exceed the prior week’s Friday high. The January COF report was mostly neutral, but the feeder cattle number could be considered slightly bearish compared to pre-report estimates. Last week’s cash feeder index lost $7 on the week and is peering to have a double top on the cash index charts. Negotiated fed cattle traded higher last week, with cold weather forcing the Packers' hands to bring numbers around them. Live sales in the north were $1 the, three higher at $234-236, while the South was $2 higher at $233-235. Given the cold weather, northern feedlots will be looking for higher prices to offset expensive and if not reduced weight gains.

Last week’s cattle slaughter was off 27,000 head and 59,000 head less than a year ago, coming in at 535,000. Choice box beef last week was $6.54, while select was $2.22 higher. Technical trading remains the same, with February cattle showing resistance at 238-239 and support at 231-232. March feeder cattle have resistance at 361, with more significant resistance at 365. Support comes in significantly at 353-354. More New World screwworm cases are being announced closer to the US border. This is prompting fears that it may eventually be found in the US.