The grain trade slips below Friday's lows but holds amid ongoing outside market influences.

The grain trade pushed lower on Friday with the chaos and concern that the new potential Federal Reserve chair, Kevin Warsh, may be a fiscal hawk, unfounded for now, but it’s the momentum that goes with it. This selling continued overnight as the metals, crude oil, and index funds pushed lower as Pres. Trump also backed away from his threat against Iran. The US dollar bounced Friday off of critical support and pushed back above 97.00, where it maintains strength this morning.

Despite overnight action in the grain trade, losses are fairly light when compared to Friday’s lows and the sharp declines that are maintained in the energy complex this morning. Whether moderating in the US also put downward pressure on energy and natural gas pricing. The question is, will farmers move grain this week with the improving weather?

The US government entered a partial shutdown on Saturday after the Senate passed a spending bill on Friday. The House is expected to take up and pass this bill this week, keeping the partial-closure impact on trade limited.

Global weather is a focal point as hot and dry conditions persist in Argentina, and rain forecasts continue to diminish as they approach the moment of proof. Again, rain forecasts remain consistent in the models that are always seven days out. Meanwhile, the Black Sea region is seeing bitterly cold temperatures for multiple days in a row, and a lot of Russian wheat areas have no snow cover. This could affect crop production when dormancy breaks later this spring.

Consensus export data for November were mixed: soybeans were disappointing, but this was right before China began its buying spree to fulfill commitments to reenter the US market. Meanwhile, corn data remained exceptional. Today, we will see the December soybean crush number and corn grind data. Also, of interest when it comes to recent reports, the Cattle Inventory data was released on Friday, showing a dairy herd up 2% from year-ago levels and 1% above estimates. This again calls into question the USDA's methodology for converting corn silage acres to grain acres. Dairy cattle go through a lot of groceries (corn silage), and with the herd up 2% rather than estimates of 1%, they are not just eating grain.

Live cattle remained congested last week despite cash trade having live sales in the north as much as $5 higher for the week at $240, and trade in the South also picked up $5 to trade at equal valuation near 240. Slaughter last week was lower at 531,000 head. April live cattle posted an outside session lower on Friday (Friday’s high was one tick higher than Thursday, and it then closed below Thursday’s low). That technical damage needs to be quickly erased in the next two sessions, with April cattle needing to climb above 240 to stop technical selling momentum. Feeder cattle need to maintain a closing status above 360 or risk technical liquidation despite a strong feeder cash market.

Friday’s Cattle Inventory report showed or herd down .3% from the year ago, as expected on the estimates, but the surprise was the dairy herd up 2% over the year ago, offsetting the beef herd down 1%. It’s the dairy cattle and the size of their beef frames that have helped the industry generate more profit, while milk has come up short in that department. Cattle futures would likely be called lower this morning if outside markets stayed as soft as they had been in the night hours, but they could still create a tug this morning if risk-off outflows of money due to Friday’s corrective action continue.