Grains rally as index funds find renewed interest in ownership.

Corn, soybeans, and wheat are all seeing gains in overnight trade, boosted by renewed interest from managed money. However, the real momentum is in the metals market, gold has surged nearly $200 an ounce and silver is up over $7, driven by growing concerns over a weakening U.S. dollar and instability in crypto markets. This shift in sentiment is fueling broad safe-haven buying. The bears are trying to suggest that the corn rally is just a muted response to Pres. Trump’s E-15 talk that will fade. They’re missing the point that the US dollar is breaking, and index funds don’t want to be short cheap Ag products; they’d rather be neutral or long.

Grain markets are also supported by ongoing cuts to Argentina’s crop outlook, with analysts trimming 2 million metric tons from corn and 1 million from soybeans. Hot, dry weather is also starting to hit Argentine beef production. Meanwhile, Brazil is facing domestic logistical challenges, slowing export flows and tightening supplies at ports. Strength in Gulf soybean basis suggests end-user demand is resurfacing. This has soybeans trading at new highs for the calendar year, showing that the first of the year lows were of significance.

President Trump’s visit to Iowa raised hopes for a renewable fuels 

announcement, but none came. He did, however, signal support for year-round E-15 if legislation reaches his desk. Corn, though, is finding ongoing support, as year-to-date exports are at 1.24 Bil Bu, up 53% over last year. We only need 64 Mil Bu loadings per week to satisfy the USDA’s current aggressive export pace. It appears that the number could be increased further. Heat is impacting the Argentine corn crop.

Fresh headlines are limited today. Weekly ethanol data is due this morning, and the Fed’s interest rate decision will come near the close at 1:00 p.m. CT. Markets are not expecting a rate change. What’s gaining attention is the growing likelihood of a government shutdown by Friday unless lawmakers pull DHS funding from the current budget plan or reach a compromise.

Live cattle prices were lower yesterday, while feeder cattle values stagnated. Despite feeder cattle strength on Monday, it did not carry over into Tuesday. The cash feeder index picked up $1.16 yesterday and is at $364.73, while the January feeder contract remains elevated above it. The contract settles out on Friday. Box beef values are not lifting to support hopes of higher trade this week, as select values stumbled yesterday.

Iowa State University released its estimates for the December feedlot returns, and they showed profits on the 750-pound steers fell to $4.69 cents per head, which was off $500-$600/head over the summer. Meanwhile, they showed 560-pound steers at an estimated return of $435/head. The light calves made more money as they were purchased before the big summer rally.