Grains continue to recover from WASDE and potential EU sanctions.

This morning’s trade sees a recovery rally and also exceeds yesterday’s highs in some areas. Yesterday, the grain markets absorbed a pretty negative impact from a new story with the President. Trump announced a tariff on eight EU countries starting February 1, and if they don’t work with the US to acquire Greenland. You add the fact that this has been thrown at grains along with last week’s massive USDA WASDE crop revelations, corn rallying from 420 is significant given the lows of last fall, sustaining values above 410.Even soybeans and wheat could have traded a lot worse on Monday, instead we have soybeans this morning ready to attack the pre-WASDE data price levels.

Soybeans are finding support in both the meal and oil complexes as southern Argentina continues to see the forecast for rain turn barren, while hot, dry conditions are returning. Many bears continued to ignore this, but large South American production harvests will not add up to their worst-case scenarios, and some have already started lowering production expectations.

Oil prices remain firm as the crude oil market seems to be moving into an Iran watch scenario. This also supports biofuel interests, with the grind for corn last year at a record level. US corn exports are already 36% of the yearly estimate, whereas we typically would only be at 26%. We have exported 1.18 Bil Bu. The US soybean export pace is 42% of the yearly estimate, down from 60% a year ago. Exports are at 710 Mil Bu. Wheat exports are also very strong at 63% of the yearly estimate, up from 59% on average. Although Argentina has a large wheat crop, its protein levels are low, which keeps US demand strong.

Live and feeder cattle found a recovery rally yesterday, but it was small compared to Friday’s break. Discounts to cash have the feeder index at $367.68, as compared to the January contract at 362.975. March feeders are almost a full $10.00 discount. Friday’s COF report should reflect “on feed” number roughly 2% lower, “placements” just above 4% lower, and “marketing's” 2% more than last year.

Box beef values yesterday split directions: choice up $0.43 at $3 64.76, while select lost $0.49 at $359.84. Yesterday, a few loads were traded in Iowa at $232, setting up a steady tone for trade this week. April cattle have support at 231.50-232.00 while resistance remains at 237.50-238.00. March feeder cattle have major support at 353.35-354.00. On the upside, 361.00 has become renewed resistance, with last week’s high of 365.00 a major obstacle.