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3 Big Things, October 23

Corn, Soybeans Little Changed as Investors Weigh Stronger Dollar, Yields

Corn and soybeans were little changed overnight as investors weigh a stronger dollar that could hurt demand vs. weaker-than-expected yields in the Midwest.

The U.S. dollar gained after European Central Bank President Mario Draghi yesterday hinted that the institution would implement more stimulus measures to improve Europe’s economy. That cut the value of the Euro to a two-week low against the greenback as monetary stimulus tends to weaken a currency.

A stronger dollar, however, makes U.S. products (including grains and oilseed) less attractive to overseas buyers, which could hurt long-term demand. That’s bad news for exporters as a stronger dollar combined with what’s expected to be a monster crop in Brazil could put U.S. export sales at risk. (http://community.agriculture.com/t5/Marketing/Floor-Talk-October-21/td-p/610271)

While exports are in danger of declining, it’s likely that yields in some parts of the Midwest where the bulk of crops are in the bin came in lower than some had expected.

Yields in the Delta region were surprisingly poor, but most growers, analysts, and traders expected them to improve as the harvest moved north. They did, but not to the extent some had expected.

Corn futures for December delivery fell ½ cent to $3.77 ¾ a bushel overnight on the Chicago Board of Trade.

Soybean futures for November delivery declined 1 ¼ cents to $8.97 ½ a bushel in Chicago. December soymeal futures rose $1 to $306.80 a short ton. December soyoil rose 0.03 cent to 28.82 cents a pound.

Wheat for December delivery gained 1 ½ cents to $4.92 ¼ a bushel on the CBOT.

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Butterfly Effect: ECB Moves May Hurt U.S. Farmers

The theory of chaos’ butterfly effect essentially states that if a butterfly flaps its wings in one part of the world, it will eventually have a profound effect on events in another part of the world.

While that’s a bit of an extreme way to describe how high unemployment in Europe has an effect on a grower in Iowa, it’s not too far off.

Because of the economic crisis in Europe, which thus far hasn’t gotten much better in the past few years, the European Central Bank’s president yesterday hinted that he may lower interest rates – that are already negative – and offer further stimulus measures, with the hopes of dragging the continent’s economy out of the doldrums and boosting employment.

While that’s potentially good news for Europe, it cuts the Euro, thereby improving the value of the U.S. dollar. That, in turn, makes U.S. goods less attractive to overseas buyers, thus hurting demand for everything from American-made cars to corn to sofas to soybeans.

While it may seem half a world away, we live in a global economy, and the European Central Bank’s butterfly has flapped its wings.

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Rain Forecast in Northern Midwest Next Two Days

Rain is forecast to fall in the next 48 hours for parts of northeast Iowa into Wisconsin, which could delay harvest in areas where crops are still in the ground.  (http://www.agriculture.com/weather)

Precipitation is possible in a wide swath of the northern Midwest from Iowa north into Wisconsin and over to Ohio, according to the National Weather Service.

About 59% of corn was collected as of Sunday, while 77% of soybeans were harvested, the U.S. Department of Agriculture said in a report this week. Those numbers are expected to rise as mostly dry weather in growing areas likely allowed farmers to continue harvesting.

More rain is expected in parts of Oklahoma and Texas in the next two days, the NWS said. A storm that was expected to drop as much as 5 inches of rain and cause flash flooding in the southern Plains is making its way across the states. (www.weather.gov)

The NWS has issued more flood warnings, mostly in central Texas from its border with Oklahoma to Mexico. While the rain is good for winter wheat planted in the area, it could do damage to soils if it’s too heavy. 

Get involved in the discussion in Marketing Talk at  http://community.agriculture.com/t5/Marketing/bd-p/marketing.

 

 

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