Another new price high for soybeans overnight.

Overnight, soybeans were firmer, gaining a dime at one point in the early session on hopes Pres. Trump would make friendly comments. Yesterday, Ag markets found support from chatter that China may be in the market for May soybean shipments out of the Pacific Northwest, along with fresh discussion of biofuel policy. Reports indicate that the EPA could rely on Renewable Volume Obligations to set blending targets rather than using RIN values. Quick calculations suggest that more than 5 billion gallons in obligations would translate into roughly 40 billion pounds of feedstock demand, assuming about eight pounds per gallon.

That figure far exceeds current domestic soybean oil production capacity, which runs roughly 20 percent below what would be required. This mismatch helps explain the aggressive bidding for soybean oil call options by processors and obligated parties seeking coverage. One key takeaway is that imported feedstocks will likely remain necessary to meet these requirements, making it unlikely they will face meaningful reductions in RIN treatment if the mandate structure holds.

Wheat futures again drifted for the third session in a row now after last week’s spike high, as players in the market seem to be producing rumors that Argentine wheat imports are possible into the SE US given last week’s sharp rally. Whether those rumors develop or not, what’s more important is that rain arrives as forecasted into the southern plains of the US. This Friday’s First Notice Day is weighing on old crop corn and wheat values. In a friendly atmosphere, the grain market would tend to bottom by Thursday and firm up when you flip the calendar over into March.

Crop outlooks across South America are starting to diverge. Some analysts are trimming yield expectations, yet overall production prospects remain sizable, particularly for Brazil’s soybean crop. Market attention is also shifting toward crop quality in Brazil, as persistent rains appear to have reduced oil content and protein levels in portions of the harvest. Argentina continues to deal with hot, dry weather, though most forecasters have been slow to make meaningful reductions to production estimates.

Tariff rhetoric has eased following the recent Supreme Court ruling, with limited pushback from global trade partners outside of the European Union. A few US companies, including FedEx, have begun pursuing legal action seeking reimbursement for previously collected tariff costs. For now, the dominant influence on trade appears to be month-end position balancing rather than any major shift in fundamentals.

Yesterday’s mild strength in the cattle trade may be checked this morning, as Pres. Trump did bring up cattle prices in last night’s State of the Union address, saying that prices were softening with a weaker outlook. Is it possible that there is a discussion of more imports in the background, along with the potential of a slow border opening from Mexico? Especially after Mexico allowed the US to help identify/locate and take out the key drug kingpin over the weekend.

Yesterday’s cash feeder index softened by $0.30 and is at $275.41, a considerable premium to the March contract. When you look at the calendar, March feeders do not have to be aligned for another 30 days. Yesterday’s cutout values were explosive, with choice up $8.21 at $377.43, and select gained $1.70 $366.01. Yesterday, feeder cattle closed technically weak, as the gain was not enough to offset the damage from weakness on Friday and Monday. Failure for April feeders to close back above 363.50 puts them at risk of liquidation. April cattle have initial support at 238, but if they experience heavy selling, the next major support level is 234.