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3 Big Things Today, January 24

Soybeans, Grains Little Changed; AGCO ‘Winner’ in Fourth Quarter, Deere, CNH Still Close.

1. Soybeans, Grains Little Changed in Overnight Trading

Soybeans and grains were little changed as investors weigh skepticism about trade talks between the U.S. and China against hot, dry weather in Brazil.

Negotiations between the U.S. and China are scheduled for January 30-31 after White House officials confirmed the talks were still on after reports they wouldn’t happen.

Still, Michael Pillsbury, the director for the Center for Chinese Strategy at the Hudson Institute, who reportedly has the ear of President Trump, said in a CNBC interview that he doesn’t expect negotiators to come to a trade agreement during the talks.

In Brazil, meanwhile, it’s expected to be hot and dry with temperatures in the 90s in several growing areas for the rest of this week and next week, according to forecasters.

That’s threatening a large percentage of crops in the South American country, which may in turn push overseas buyers seeking supplies to the U.S.

Soybeans for March delivery fell ¾¢ to $9.14¼ a bushel overnight on the Chicago Board of Trade. Soy meal added 50¢ to $313.40 a short ton, and soy oil lost 0.12¢ to 29.26¢ a pound.

Corn was unchanged at $3.78¾ a bushel overnight

Wheat for March delivery added ¾¢ to $5.26¾ a bushel, while Kansas City futures rose ½¢ to $5.15½ a bushel. 

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Today’s 3 Big Things from Successful Farming magazine is brought to you by Golden Harvest Seeds.

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2. Equipment Manufacturer AGCO Was ‘Winner’ in Fourth Quarter; Deere, CNH Aren’t Far Behind

Agricultural equipment manufacturer AGCO was the “relative winner” among makers of large implements in the fourth quarter of 2018, which has carried over into 2019, but the company is facing headwinds this year, according to international investment bank Barclays.

AGCO’s customer base may be affected by several items that are out of its control including the ongoing tariffs from China, less access to cheap debt as interest rates rise, and land values that are declining in some states.

“(That) leaves AGCO’s customer base, as a percentage of total, more vulnerable,” analyst Adam Seiden said in a report.

While the bank believes AGCO outperformed its rivals Deere and CNH, those companies are in a similar position, which means a lot of competition for the company, Seiden said.

About 10% of AGCO’s ag-industry sales come from South America, about the same as Deere, meaning it has no advantage in the region. While things look rosy from a growth standpoint in South America, drought conditions in Brazil are curbing optimism, the bank  said.

AGCO has long had aspirations to grow in both North America and South America, but Deere and CNH are “aggressively defending” their market share in South America.

“The IDEAL combine is in its infancy, and the company is working off a small base in a tenuous market,” Seiden said. “A path to inroads with the U.S. farmer appears limited outside of promotions.”

The company has set a goal of doubling profit margins in two years, but since 1999, the largest gain over a two-year period was well below that goal, and that was coming out of a recession, he said.

In other words, that happening is a long shot, especially in the current economic environment.

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Today’s 3 Big Things from Successful Farming magazine is brought to you by Golden Harvest Seeds.

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3. Blizzard Continues in Parts of Minnesota, Arctic Air in Iowa Drops Temperatures to -35˚F.

If you’re in the central Corn Belt, you might want to stay inside today.

A blizzard warning is still in effect through this morning for parts of western Minnesota, according to the National Weather Service.

Wind gusts of up to 45 mph have been observed, which has created widespread blowing snow and whiteout conditions in some areas, the NWS said in a report early this morning.

In southern Minnesota, winds will be a bit lighter but will still blow snow around, reducing visibility and creating dangerous conditions. Resulting wind chills will be from -25˚F. to -30˚F.

In central Iowa, a cold front from the Arctic will bring sustained winds of up to 30 mph with gusts over 40 mph, which will create whiteout conditions and “significantly” reduce visibility at times, the agency said.

Wind chills will be from -30˚F. to -35˚F. by late afternoon and could fall further overnight, according to the NWS.

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