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3 Big Things Today, September 22

Soybeans, Corn Mixed in Overnight Trading; Federal Reserve Leaves Interest Rate Unchanged.

1. Soybeans, Corn Mixed as Investors Weigh Weather, Demand Vs. Record Forecasts

Soybeans were slightly higher overnight while corn declined as investors weigh adverse weather conditions and signs of demand for U.S. products against forecasts for record crops.

Incessant wet weather in the past two months has inundated fields with precipitation, leading to flooded fields and fungal diseases. The excessive rain also is slowing collection of crops. Still, the U.S. Department of Agriculture last week forecast record production for both corn and beans.

The USDA yesterday reported export sales of 364,000 metric tons of soybeans, including 120,000 to China, 118,000 to Taiwan, and 126,000 tons to unknown buyers. Exporters also sold 145,000 tons of hard red winter wheat to Morocco and 116,000 tons of sorghum, the government said.

Soybeans for November delivery rose 1¾¢ to $3.39¼ a bushel overnight on the Chicago Board of Trade. Soy meal futures for December delivery added 60¢ to $309.30 a short ton, and soy oil gained 0.28¢ to 33.94¢ a pound.

Corn futures for December delivery fell ¾¢ to $3.39¼ a bushel.

Wheat futures for December delivery fell ½¢ to $4.07¼ a bushel in Chicago, while Kansas City futures lost 2¾¢ to $4.19½ a bushel.

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2. Federal Reserve Leaves Interest Rates Unchanged Sixth Time This Year

 The Federal Reserve yesterday decided to keep its base interest rate unchanged for the sixth time this year as it waits for further evidence that the economy has progressed enough to warrant an increase.

The Federal Open Markets Committee (FOMC) said the case to raise the federal funds rate is stronger than it was, but it will wait to ensure a hike is warranted before taking action. Economists and other market-watchers had expected the Fed would leave interest rates at 0.25% to 0.5%.

“The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives,” the FOMC said in a statement. “The stance of monetary policy remains accommodative, thereby, supporting further improvement in labor market conditions and a return to 2% inflation.”

The federal funds rate generally only affects interest on loans for large-ticket items, generally those with terms of more than five years including houses, land, farm equipment, and large vehicles. Car loans and other short-term debt usually aren’t affected by an increase in the federal funds rate.

The Fed in December raised its base rate for the first time in almost a decade. At the time, it said it would likely raise rates four times in 2016, but so far that hasn’t happened, as global economic indicators soured amid political strife including conflicts between Russia and Ukraine, an economic slowdown in Europe, and UK voters opting to leave the European Union.

While the U.S. economy has shown signs of strength including increased payrolls and a 4.9% unemployment rate – what some economists are saying is near the much-desired full-employment rate – global headwinds persist.

The FOMC said interest rates will rise slowly and the federal funds rate will remain low for quite some time. Any rate hikes will depend on economic data.

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3. Thunderstorms, Rainfall Expected to Cause Flooding in Upper Midwest   

Showers and thunderstorms are expected in parts of the Upper Midwest on Thursday, according to the National Weather Service.

Showers in parts of Minnesota, Iowa, and Wisconsin are expected to bring another 2 inches of rain after a deluge yesterday caused rivers to overflow. Because of the rain, a flash flood warning is in effect for several counties in the region. The storms are expected to produce hail and strong winds.

Flooding is expected to continue into the weekend as heavy rain moves through the region. Storms are expected to persist through the weekend, the NWS said.

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