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3 Big Things Today, November 16

Beans, Corns Higher in Overnight Trading; Battle Rages Between Dollar, Low Prices.

1. Soybean, Corn Futures Rise Overnight on Strong Demand

Soybeans improved in the overnight session, building on Tuesday’s strength, amid strong demand for U.S. supplies and concerns about crops in South America.

Private exporters reported sales of 121,500 metric tons of soybeans for delivery to China in the current marketing year, the Department of Agriculture said in a report. Exporters also sold 126,000 tons of soybeans to unknown buyers.

On Monday, the USDA reported sales of 324,000 tons of soybeans to China and 132,000 tons to unknown buyers. The agency also said exporters sold 175,000 tons of grain sorghum to China.

Extremely wet weather in Brazil and Argentina recently has left some farmers unable to plant fields in some areas and unable to harvest crops in others, according to weather forecasters.

Soybeans for January delivery rose 4¼¢ to $9.93¾ a bushel on the Chicago Board of Trade. Soy meal futures for December delivery gained 20¢ to $310.30 a short ton, and soy oil added 0.28¢ to 34.49¢ a pound. 

Corn futures for December delivery gained 1½¢ to $3.43 a bushel in Chicago.

Wheat futures for December delivery rose a 1¢ to $4 a bushel in Chicago, while Kansas City futures fell ½¢ to $4.07½ a bushel. 

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2. Strength in Both Pits Most Valuable Dollar in a Year vs. Unstoppable Export Sales

Something has to give.

There’s a showdown brewing in commodities, pitting the strengthening dollar against continued strong demand from overseas buyers for U.S. corn, beans, and wheat.

The value of the dollar has neared a one-year high against global currencies amid speculation that President-elect Donald Trump will cut taxes and boost infrastructure spending, boosting interest rates faster than previously anticipated and, in turn, increasing the value of the greenback.

When the dollar value rises, demand for U.S. goods, including agricultural products, declines because overseas buyers have less purchasing power.

Meanwhile, demand for the three major U.S. crops has been unusually strong, driven by relatively low prices amid expectations for record production and yields.

Corn sales since the start of the marketing year on September 1 are up 89% from the same time frame last year, according to the Department of Agriculture. Soybean sales are up 28%, and sales of wheat, since the start of its fiscal year on June 1, are up 31% year over year, USDA data show.

So what’s going to give? Are buyers going to back off purchasing U.S. crops because the strengthening dollar? Or are they going to continue buying while prices are low? Conventional wisdom would say that buying while the dollar is so strong is unwise, but with prices this low, it’s hard for them not to book as much as possible to stock up long term.

This battle between the dollar and low prices will be one to watch, especially considering demand has been buoying prices as of late.

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3. Much of Upper Midwest in Winter Storm Watch, Blizzard Watch

Parts of western Nebraska, almost all of South Dakota, and a large chunk of Minnesota are set to be in either a winter storm watch or blizzard watch this morning, as a storm that originated in the Rockies moves east.

The blizzard watch, which is centralized around the border between North Dakota, South Dakota, and Minnesota, will start tomorrow and continue through Friday evening, the National Weather Service said.

“Rain will quickly change to snow late Thursday night and become heavy at times through Friday afternoon,” the NWS said. “A very strong north to northwest wind will develop during this time.”

Total snow accumulation is forecast from 6 inches to 9 inches, the agency said. Wind speeds will top out at 50 mph, creating whiteout conditions and greatly reducing visibility.

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