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3 Big Things Today, August 18

Soybeans Sharply Lower on Record Output; Fed Wants Data Before Raising Interest Rates.

1. Soybeans Drop as Record Production Weighs on Prices

Soybeans were sharply lower overnight as prospects for record production weighed on prices.

The U.S. Department of Agriculture last week forecast domestic output at 4.1 billion bushels, the largest-ever crop, after favorable weather for most of the growing season improved crop conditions. Corn production is pegged at 15.2 billion bushels, also a record.

More than 70% of the U.S. soybean and corn crops were in good or excellent condition as of Sunday, and with more rain this week, ratings will either stand fast or ratchet up slightly. Corn futures were little changed on Thursday morning.  

Soybean futures for November delivery plunged 13½¢ to $10.02½ a bushel overnight on the Chicago Board of Trade. Soy meal futures for December delivery fell $4.10 to $328.30 a short ton, and soy oil lost 0.44¢ to 34¢ a pound.

Corn futures for December delivery fell ¼¢ to $3.39½ a bushel in Chicago.

Wheat futures for September delivery lost 1¾¢ to $4.41¼ a bushel, while Kansas City futures declined ¾¢ to $4.17½ a bushel in Chicago.

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2. Federal Reserve Committee Wants `More Data’ Before Hiking Rates

Just when investors thought the Federal Reserve might hike interest rates, the committee who decides such actions determined it needs “more data” before making a decision.

That was the conclusion members of the Federal Open Markets Committee (FOMC) – the arm of the Fed that can raise, lower, or leave the federal funds rate – came to when they met last month, according to minutes released from their July meeting.

“Members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity,” the FOMC said in the minutes.

That essentially means the committee decided to leave the Fed’s base interest rate at 0.25% to 0.5%, where it’s been since December. At that time, the Fed had expected to raise rates four times in 2016, but so far, that hasn’t happened due to a weakened global economy that’s weighing on the U.S. economy.

For farmers, it means they can still make large purchases at a low interest rate. Since the federal funds rate tends to only have an effect on loans lasting more than five or six years, smaller items such as cars or motorcycles wouldn’t be impacted anyway, but the rate should still be decent for those looking to make land or large-equipment purchases.

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3. More Rain Exacerbates Flooding in Parts of South, Midwest

Heavy rain is expecting to continue over portions of Texas, Arkansas, and Louisiana where flooding has already left thousands homeless and several dead, according to the National Weather Service.

Another several inches of rain is expected in the region, and flows from upstream rivers have led to severe flooding, especially in Louisiana where reports have said more than a dozen people have died.

Rain is expected for much of the weekend in New Orleans and Baton Rouge, near where the worst of the flooding has been, the NWS said in a report on Thursday morning.

A flash flood warning also has been issued for parts of north-central Illinois, as rain inundates that region, according to the agency. Much of the Midwest is also expected to see rain through the weekend.

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