Corn prices lead weakness on large fund ownership.

This morning’s grain trade is mixed. The hard wheat contracts offer a penny gain, while corn and soybeans softened overnight. The commitment of Traders report on Monday showed a large jump in spec fund ownership (the largest since 2022), prompting profit-taking despite positive trends. Soybeans pushed lower on their failure to hold $10.00 on yesterday's strength and closed near the lower portion of the day.

Average trade estimates are coming out for this Friday’s 2024/25 US grain ending stocks report. Corn ending stocks are pushing below 1.7 billion with an average trade guess of 1,675 Mil Bu versus 1,738 Mil Bu last month. Soybeans are at 457 Mil Bu versus 470 in December. Wheat stocks are pegged at 799 Mil Bu versus 795 in the WASDE estimate for December.

Chinese state media released an article yesterday discussing the depressed domestic corn market and an impending balancing of supply and demand within the country. They said the loftier import numbers we have been seeing in the last few years are no longer necessary, adding that unless something changes, they do not see a reason to import any additional bushels beyond the import quota figure of 7.2 mmt. If realized, this would be below the current, already viewed as bearish import estimates floated around the market so far, with traders still anticipating total imports between 10 and 15 mmt. However, if further production issues develop in South America, global supplies will be tight until the US harvest, even with reduced Chinese demand.

Weather forecasts for Argentina remain dry, but as typical, there are rainfall chances in the unreliable 11-15 day forecast. We are seeing a split develop across Northern and Southern Brazil, with too much moisture and potential harvest delays in some spots in the north, while too little moisture is concerning for the south. Dryness is likely to trim production across Paraguay and possibly Argentina as well, leading to reductions in some of the loftier South American soy production estimates, with traders backing away from the expectations of a 250 mmt crop that were floated ahead of the holidays. It is far too early yet to make assumptions about corn, though it does appear that the Argentina crop is likely to get smaller. Nearly 80% of Brazil’s corn crop is planted after the soybean harvest is complete, leaving that wide open to a full growing season of weather.

Live and feeder cattle prices closed higher yesterday but well off session highs. February and June live cattle did make new contract highs before the retreat, while feeder cattle posted inside trading days compared to Friday’s large ranges. March feeders held a narrow range, with the cash feeder index jumping $2.87 to a new record high of $ 268.63. Negotiated fed cattle trade is anticipated later this week but at firm prices. Last week, the Packers bought 85,514 head, the most in nine weeks. 65,944 head were for 1-14 day delivery and 19,570 for 15-30 day delivery. Forward contracts sales average the highest at $316, with negotiated grid sales at the low end of the range at $306. The average formula sale was $308, and negotiated sales averaged $315. Sales ranged from $31-40 higher than a year ago.

Cattle futures are becoming extended, and cattle rarely want to go premium cash at this time of year, so a stalling effect is starting to develop on the charts. Seasonally, cattle futures tend to peak in the first days of the calendar year after a December rally and drift for a few weeks. Tight available numbers will offer support on setbacks.