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3 Big Things Today, December 21

Soybeans Rise After Yesterday's Drop; Strong Demand Stronger if Not For Valuable Dollar.

1. Soybeans Rise Overnight as Investors Seek Bargains

Soybeans rose in overnight trading as investors seeking a bargain again jump into the market.

Futures yesterday fell 16¢, creating a buying opportunity. Prices were pressured on Tuesday amid rainfall in parts of Argentina and Brazil that may boost crops. Large harvests in South America will add to a global glut of the oilseeds after U.S. growers collected a record amount.

Still, prices have been underpinned by strong demand. Sales so far this marketing year are up 30% from the same time frame last year, according to the Department of Agriculture, which is likely a reason to see purchasing the day after a big drop in prices.

Soybean futures for January delivery rose 4½¢ to $10.09¾ a bushel on the Chicago Board of Trade. Soy meal added 70¢ to $309.50 a short ton, and soy oil gained 0.10¢ to 36.16¢ a pound.

Corn futures for March delivery were unchanged at $3.50¼ a bushel in Chicago.

Wheat futures for March delivery declined 1½¢ to $4.01¾ a bushel overnight. Kansas City wheat lost 2¢ to $4.10¾ a bushel.

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2. Demand for U.S. Crops May Be Stronger if Dollar Wasn’t So Valuable

Demand for U.S. corn and soybeans has been extremely strong as sales of the grain are up almost 80% since the start of the marketing year on September 1 and sales of the oilseed are up nearly 30%, but they may be even better if not for the strong dollar.

Analysts a BMO Capital Markets said in a report yesterday that the negative effects of the strong greenback have been a negative for U.S. producers but a positive for growers in Canada.

“In the United States, the lofty greenback, which has gained 20% on a trade-weighted basis since the start of 2014, has been yet another bearish factor for crop prices and revenue,” Aaron Goertzen, a senior economist at BMO, said in a report. “Canadian producers, in contrast, have benefitted from a drop in the loonie, which is down 17% against the U.S. dollar since the start of 2014 and has provided a like-size lift to crop prices north of the border.”

A strong dollar makes U.S. goods effectively more expensive to overseas buyers because it cuts into their purchasing power. The dollar has been strengthening due to the strong U.S. economy as other currencies weaken on global economic uncertainty.

U.S. crops are, on average, about 30% below all-time highs due to increased production and, partly, the stronger dollar, while Canadian crops are only down 18% from record prices, BMO said.

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3. Storm May Hit Northern Plains Christmas Weekend, Hindering Travel

A storm may hit some parts of the Northern Plains this weekend, according to the National Weather Service.

“The next significant storm to cross the region looks to be during the  Christmas weekend,” the NWS said in a report on Wednesday. “Uncertainty remains with the track and timing of the system; however, there is potential for the area to receive several inches of snow.”

Strong wind also is a possibility that could reduce visibility. If the storm hits right around Christmas day, it could severely impact travel in the region, the NWS said.

Weather maps in the Midwest are mostly quiet after the polar vortex moved out of the region. Temperatures are warmer today and will continue to rise throughout the week, the NWS said.

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