Demand remains the main focal point of today’s commodity market, and data is less than favorable. Import buyers are showing little urgency in covering any future needs right now as their attitude is why buy commodities today if they may be cheaper tomorrow. The start of the South American export program on new crop soybeans is further depressing importer interest in U.S. offers right now, especially with soybeans out of Brazil over $1.70 per bushel less than the U.S. The recent surge in the U.S. dollar has widened this spread even more. Slowing world commodity demand on a whole is depressing export interest on all levels.

Now that soybean harvest is progressing in Brazil, we are seeing more interest on safrinha plantings. Initially it was thought safrinha plantings would be down this year given the low projected returns and less than ideal weather. While returns remain lower than in recent years, Brazil has started to receive timely rainfall. Soybean harvest is also progressing at a rapid rate which leaves more time for corn planting and crop development. As a result, farmers in Brazil are seeding a larger volume of acres but using lower cost inputs. This may still lead to a smaller corn crop than first projected for Brazil, but larger than recent expectations pointed to.

While the grain and oilseed markets have been under pressure recently, the livestock complex is showing some strength. Cheaper feed grain is one reason for this as livestock producers are more willing to fill their facilities with improved production costs.

The main support for livestock futures has been strength in the cash market, primarily on cattle. Cattle feeders are more willing to hold animals to higher weights which is being verified by weekly slaughter data. The current beef carcass in the U.S. is averaging 900 pounds, eight pounds higher than a year ago. This is generating a tighter cash supply though, with live cattle gaining $3-$4 over the past week. This has drug cattle futures higher.

Another source of support for the cattle complex is simple low inventory. The U.S. cattle inventory as of Jan. 1 was the smallest on record since 1951. Given the calf crop in 2023 was the smallest in nearly as many years it will take time for this inventory to build. The United States is offsetting these low cattle numbers with elevated beef imports, especially lower grade select beef which is mainly used for ground beef. The United States is currently forecast to import 3.77 billion pounds of beef this year while beef exports are forecast at 2.79 billion pounds.

Pork production has been increasing though, which is starting to limit advances in hog futures. Traders have moved their position to the long side however, and this is keeping a floor under hog futures.

One negative for the U.S. cattle market right now is the elevated pressure we are seeing in the world market from Australia. Australia has long been a dominate exporter of beef, but current shipments out of the supplier are the highest since 2019. Sources in Australia believe exports will be even stronger during 2024 as more buyers surface, mainly China, whose appetite for beef continues to grow.

Even with major hurdles, Ukraine exports are running at elevated volumes. This is in part due to the humanitarian corridor that was formed following the ending of the Russian agreed to channel at the start of the war between the two countries. Since August, Ukraine has exported 20 million metric tons of commodities through the port at Odesa. Of this 14.3 mmt were grains. In the month of January, Ukraine exported 6.3 mmt of grain which was equal to pre-war levels. Ukraine has large volumes of grain to export and buyers want to secure these offers as they are well below other suppliers in the world market.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.