Soybean oil leads overnight grain strength.

The overnight grain trade did a Turnaround-Tuesday on Wednesday, with markets moving in the opposite direction after the first trading day of the week, when they reverse from a meltdown or a blowup. Soybeans pushed higher, following soybean oil bolting to new high overnight as rumors are circulating that the EPA will send its proposed biofuel blend volumes to the White House this week.

Meanwhile, in South America, corn and soybean production estimates are starting to reflect lower actual production. There are some cuts in the Brazilian crop, which certainly indicate quality issues developing. Meanwhile, no reductions have been made to corn, but there is a growing concern that the safrinha planting is running too far behind. Brazil is harvesting this huge crop, which is limiting time for harvesting the first corn crop and for planting safrinha. The safrinha planting is 7% behind, with more corn being planted outside the optimum yield window. Recall that safrinha corn needs to get in a timely manner to avoid the natural hot and dry season that develops, and can occur during the critical pollination time.

The USDA Ag Outlook Forum is taking place in Washington, D.C., and on Thursday morning, we should see initial new-crop balance sheet estimates, with expectations for fewer corn acres and higher soybean intentions. Remember, these are not farmer-derived intentions, but guesses from the desks of enumerators in the USDA. The USDA will use trendline estimates of corn at around 184 BPA and soybeans at 53.5 BPA. It’s counting the roosters before the eggs are hatched time again. Acreage guesses are roughly around 95 million for corn and 85 million for soybeans.

Lunar New Year is limiting news from China, and Carnival begins today in South America, which may cause a temporary market disruption. The US dollar, metals, and energies are all showing strength this morning, and equities are higher in pre-trade as well. Crude oil is higher as Iran is not playing nice in the sandbox again, and Pres. Trump has another armada en route to the Middle East, expected to arrive in early March. Also, Russia and Ukraine continue to remain in an impasse with no resolution still in sight for the now four-year war.

Live and feeder cattle futures gapped higher yesterday and raced back to prior highs, but did not make new contract highs. Last week’s cash cattle market showed strength with cash trade as high as 248 along with the feeder index through Monday and Tuesday, picking up $2.16, and is currently at $376.06.

Again, disappointingly for the Packers, box beef prices were lower on Tuesday, erasing Monday’s gains. Fortunately, the Packers' by-product is generating revenue, but losses persist. (It’s hard to feel sorry for the Packers after manipulating markets over the prior decade with the formula cattle, which allowed them to stay out of the negotiated markets at times, depressing prices. This kept out the profitability for ranchers to increase their herds.)

The CME refuses to match the cash market now, as this bull market has to climb a wall of worry, and the only way the board will want to match cash is in expiration. April feeders have 70+ days until they have to match the index. Technical action continues to hint at a building head-and-shoulders top or a potential double top.