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3 Big Things Today, March 14
1. Wheat Lower in Overnight Trading Despite Ongoing Drought
Wheat futures were a bit lower overnight, while corn and beans were little changed.
While it’s been extremely dry in the Southern Plains, any potential damage to the U.S. hard red winter wheat crop may already be baked into the price. Investors likely need further bullish news to continue driving prices higher.
Still, there’s no relief in sight for growers in the region, and the drought, which has steadily worsened in the past several months, is underpinning futures and keeping them from falling too far.
Corn prices are hovering near the highest level since July, but there’s a lack of news that’s keeping futures rangebound, analysts said.
Wheat for May delivery fell 2¢ to $4.84½ a bushel overnight on the Chicago Board of Trade, while Kansas City futures lost 2¼¢ to $5.18 a bushel.
Soybean futures for May delivery rose 2¢ to $10.50¾ a bushel overnight. Soymeal rose $3.20 to $378.70 a short ton, and soy oil was up 0.01¢ to 32.23¢ a pound.
Corn futures for May delivery lost ¾¢ to $3.91 a bushel overnight.
2. Proposal to Fix Section 199A of Tax Code Gets Support From Farm Groups
A proposal that would amend Section 199A of the GOP tax code has been agreed upon by the National Council of Farmer Cooperatives (NCFC) and the National Grain and Feed Association (NGFA).
The fix for the tax code that would unintentionally give grower-members of cooperatives a bigger tax break when selling to their coop vs. selling to a large firm such as ADM or Bunge or an ethanol plant was introduced by the House Ways and Means Committee.
House Ways and Means Committee Chairman Kevin Brady, Senate Finance Committee Chairman Orrin Hatch, and the Congressional Joint Committee on Taxation developed the legislative language in the past week, which will replicate to the greatest extent possible tax benefits to farmer-owned cooperatives and patrons under the prior Section 199.
It also is designed to “restore the competitive landscape of the marketplace as it existed in December 2017 so that the tax code does not provide an incentive for farmers to do business with a company purely because it is organized as a cooperative or private (or) independent firm,” the NCFC and NGFA said.
If approved, it will be retroactive to January 1 and become part of the omnibus bill set to be approved on March 23, the NCFC and NGFA said in a joint statement. The amendment “warrants bipartisan support,” the groups said.
“By combining the individual-level business deductions that farmers can claim and the pass-through from their co-ops, farmers selling to cooperatives have the opportunity to see benefits in excess of the 20% 199A pass-through deduction,” said Chuck Conner, the president of the NCFC.
3. Low Humidity, Strong Winds Create Tinderbox Conditions in Southern Plains
Extremely dry weather that includes low humidity and strong winds is creating more drought-related fire risks in the Southern Plains.
A red-flag warning, indicating conditions are ripe for wild fires, is in effect for the eastern two thirds of Kansas and several counties in west-central Oklahoma, according to the National Weather Service.
Relative humidity is seen around 14% today with sustained winds of 25 mph, the NWS said in a report early Wednesday morning. Gusts of up to 30 mph are forecast.
“Any fires that start will have extreme fire behavior and spread rapidly,” the agency said. “Outdoor burning is not advised.”