Futures are under pressure this morning, with soybeans leading the decline. The primary driver is escalating trade tension between the United States and China. Starting next Tuesday, the US plans to impose new charges on China-linked vessels, reportedly adding $50 per metric ton to import costs. This move is already deterring buyer interest. In response, China has announced it will match the fee for all US-related vessels. These new barriers are making trade between the two nations as difficult as the tariffs themselves. However, the White House has now indicated it may reconsider its position and could potentially withdraw the measure entirely.

Additional weakness in the energy complex is also weighing on the soy complex, compounded by more competitive soybean offers out of Brazil that are capturing global export interest. Grains are facing lighter pressure but have not shown the recent strength soybeans did, leaving them with less room to fall. One common theme about yesterday’s grain weakness is that it occurred simultaneously with crude oil weakening substantially yesterday, when the peace agreement between Hamas and Israel was agreed upon. This put ethanol values and soybean oil into a tailspin lower yesterday and overnight, along with crude oil prices breaking back to recent lows.

A general lack of fresh news continues to pressure all contracts. Uncertainty surrounding the length of the US government shutdown is also a factor, as it limits the flow of key market data. 

Harvest updates and yield reports, along with developments in the cash market, will influence today's price action. What is occurring is that soybean crush margins are improving, and soybean harvest pressure should be ending by next week. Farmers are just not selling and are storing is much as possible with the upcoming relief package once the government reopens and congressional leaders get back to work.

Yesterday, live cattle prices returned to recent resistance on the nearby, while April live cattle forward moved to new contract highs. Meanwhile, feeder cattle put on another phenomenal performance, gaining again over $5.00 on the session for the fifth day in a row. In contrast, the hogs closed lower as Chinese hog values lost 6% yesterday, with China announcing it is liquidating down its herds.

Yesterday’s cash feeder index climbed another $1.84 to just under the recent record at $367. In the live trade, only a small handful of cattle reportedly sold in NE and IA at $358 on a dressed basis, just $2 lower than last week. Volume was too late to call this a strong test. The live cattle trade has never offered an opportunity to hedge off risk of than just outright hedging market movement. The disparity between the difference in the recent feeder cattle lift has made this even greater. 

February live cattle need to press on to new highs and accelerate, or it’ll create a triple top in the 244.00 range. Apparently, there is concern that Pres. Trump will ultimately work something out with President Lulu (as he stated he will meet with him at the economic conference at the end of this month), and allow Brazilian beef tariffs to possibly be rescinded, similar to orange juice, coffee, and airplane parts. That is what’s keeping live cattle from following the excitement in the feeder cattle trade.