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3 Big Things Today, March 16
1. Beans, Corn Higher on Bargain Hunting, Wheat Rises Amid Adverse Weather
Soybeans and corn were higher overnight as bargain hunters again came calling, and wheat futures gained amid adverse weather in the U.S.
Soybeans closed yesterday about 3¢ below the psychological $10 mark, leading some investors to seek contracts on speculation that overseas buyers will snap up supplies while they’re cheap. Corn also rose on increased prospects for demand.
Wheat futures were higher as dry weather in the Southern Plains – where little or no rain has fallen for at least 30 days, according to the National Weather Service – threatens the emerging hard red winter crop. A deep freeze in parts of the eastern Midwest is putting soft red winter varieties at risk.
Soybean futures for May delivery rose 7¼¢ to $10.05¼ a bushel overnight on the Chicago Board of Trade. Soy meal added $1.90 to $329.50 a short ton, and soy oil gained 0.28¢ to 32.50¢ a pound.
Corn added 2½¢ to $3.66 a bushel in Chicago.
Wheat futures rose 2½¢ to $4.38½ a bushel, and Kansas City wheat for May delivery gained 2¾¢ to $4.50 a bushel.
2. Federal Reserve Unsurprisingly Raises Base Interest Rate, Increasing Cost to Borrow
That new tractor you wanted just got more expensive.
In what could be deemed the least surprising action taken by a government agency in a while, the U.S. Federal Reserve raised its base interest rate to 0.75% to 1% on Wednesday, increasing the cost of borrowing for everything from homes to farm equipment.
The Federal Open Markets Committee (FOMC) voted to raise the Federal Funds rate, as it’s called, as the economy continues to show signs of strengthening. A jobs report last week showed employers added 235,000 workers to payrolls, easily topping expectations for a gain of 200,000.
The Fed also said the economy is on track to reach the agency’s goal of returning to 2% inflation.
“In view of realized and expected labor market conditions and inflation, the committee decided to raise the target range for the federal funds rate to 0.75% to 1%,” Fed Chair Janet Yellen said in prepared remarks after the FOMC made its decision. “The stance of monetary policy remains accommodative, thereby, supporting some further strengthening in labor market conditions and a sustained return to 2% inflation.”
The increase is the first in 2017 after the Fed raised rates in December 2016 and December 2015. Analysts have said they’re expecting between two and three more increases this year as the economy strengthens.
That means the cost of borrowing – more so for large-ticket items such as equipment and land – will increase for producers who plan on adding new machinery or holdings this year. Generally, loans with shorter terms including cars aren’t affected as much by increases in the Federal Funds rate, though with rates creeping up, they likely will impact borrowing on credit cards and home-equity loans, analysts said.
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3. Persistent Deep Freeze From Missouri to Florida Hurting Wheat, Berries
A big chunk of land stretching from the Iowa-Missouri border all the way into central Florida is under a freeze threat again this morning.
Temperatures in much of Missouri and southern Illinois were reading into the teens this morning, according to the National Weather Service. They’re expected to rise above freezing in much of the affected area by 10 a.m., the NWS said in a report early Thursday.
Winter wheat that isn’t covered by a protective layer of snow tends to do poorly when temperatures drop below 28˚F. for more than a couple hours, as they have the past few nights. Record low temperatures in some areas are hurting everything from winter wheat to strawberries, according to news reports.
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