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3 Big Things Today, October 20

Beans, Corn Rise on Strong Demand; Dollar Strength Weakens Appeal of U.S. Goods

1. Beans, Corn Higher Overnight as Strong Demand Persists

Soybean and corn futures were higher in overnight trading on continued signs of strong demand as low prices keep U.S. supplies competitive.

The Department of Agriculture reported a sale to unknown buyers of 185,000 metric tons of soybeans yesterday, and on Tuesday said China bought 706,500 metric tons from U.S. inventories. Since the start of the marketing year on September 1, corn sales are up 85% vs. the same time frame a year earlier, while bean sales are up 28%, according to the USDA.  

Still, dry weather this week has kept the harvest moving, capping prices. The USDA is still calling for record yields and production for both crops.

Soybeans for November delivery rose 4¢ to $9.85½ a bushel on the Chicago Board of Trade. Soy meal futures for December delivery added $2.60 to $309 a short ton, and soy oil fell 0.20¢ to 35.20¢ a pound.

Corn futures for December delivery gained 1½¢ to $3.59 a bushel in Chicago.

Wheat futures for December delivery rose ¾¢t to $4.21 a bushel in Chicago, while Kansas City futures added 2¼ cents to $4.27½ a bushel. 


2. Dollar Rises to Highest in Seven Months Amid Calls for Rate Hike

The value of the dollar this week rose to the highest level against several other currencies in seven months, which could be a detriment to exports.

The greenback on Thursday morning is sitting near the highest level since March as investors increasingly expect an interest rate hike by the end of the year.

The rate likely won’t come at the Federal Reserve’s November meeting since it starts a week before the election. In fact, there’s only an 8.3% chance that the Federal Open Markets Committee – the group tasked with deciding when to increase the federal funds rate – will rate the cost of borrowing in November, but there’s a 69.5% chance it will do so in December, according to CME Group’s Fed Watch Tool.

The Fed has said several times that the case to raise rates is strengthening due to improved jobs numbers, a fairly strong housing market, and slowly increasing wages. Raising the federal funds rate generally impacts large purchases such as land and large farm equipment but not shorter-term loans such as those for furniture or cars.

As the greenback strengthens, the appeal of U.S. grains and oilseeds diminishes because it technically raises the price for would-be buyers attempting to purchase dollar-denominated goods. Thus far it hasn’t seemed to matter that the greenback is rising, mostly because prices for corn, beans, and wheat are currently so low.

It’ll be interesting to see how overseas buyers react to the stronger currency as time goes on.

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3. Weather Expected Mostly Dry in Midwest Rest of the Week

The weather maps are mostly quiet this morning as much of the Midwest remains dry, according to the National Weather Service, favoring growers looking to speed the harvest.

Isolated showers may fall in parts of Iowa, Illinois, and Missouri throughout the day, but the weather isn’t expected to turn severe, the NWS said. Dry weather is expected through the rest of the week.

A warmer and gradually wetter system will push into the Midwest early next week, bringing showers and “perhaps a thunderstorm or two” around midweek, the agency said.

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