1. CORN, SOYBEAN LOWER AS IMPORTERS SEEN SHIFTING TO SOUTH AMERICA
Corn and soybeans were lower in overnight trading on concern that very large South American crops are beginning to take business from the U.S.
The Department of Agriculture last week raised its outlook for Brazilian corn production to 91.5 million metric tons from 86.5 million. It also increased its projection for soybean output in the country to 108 million tons from the previous month’s outlook of 104 million.
With such large crops in Brazil, it’s likely the U.S. will see a seasonal decline in export sales and shipments, analysts said.
Corn futures for May delivery fell 1¢ to $3.60 a bushel in overnight trading on the Chicago Board of Trade.
Soybeans declined 4¾¢ to $10.01¼ a bushel in Chicago. Soy meal lost $2.30 to $328.60 a short ton, and soy oil added 0.10¢ to 32.22¢ a pound.
Wheat futures rose a tick to $4.30¾ a bushel, and Kansas City wheat was unchanged at $4.42¾ a bushel.
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2. FED RATE HIKE SEEMINGLY A FOREGONE CONCLUSION WITH ODDS OF INCREASE AT 93%
It’s pretty much a foregone conclusion that the U.S. Federal Reserve will raise interest rates at a meeting this week with the CME Group’s Fed Watch Tool, putting the odds of a hike at 93% this morning, up from 89% yesterday.
The Fed is expected to increase its Federal Funds Rate to a target of 0.75% to 1%, the first increase in 2017, after it raised the rate in December 2016 and December 2015 after leaving it unchanged for seven years. Many analysts believe this will be the first of three rate hikes this year.
The government tends to increase rates when the economy is showing strength. Last week’s nonfarm payroll report showed companies added 235,000 jobs in February, topping expectations for about 200,000, and that the unemployment rate was little changed at 4.7%. Wages have increased about 2.8% in the past year, which is a good sign, the Bureau of Labor Statistics said.
Employment gains increased in construction, manufacturing, health care, and mining, all but ensuring the Federal Open Markets Committee would raise rates at its meeting, which runs for the next two days. Its decision will be announced tomorrow afternoon in Washington, D.C.
An increase in rates likely would have an impact on loans for large-ticket items such as farming equipment or land purchases, economists have said.
It also will have an impact on the prime rate, which is the base borrowing rate that banks extend to their customers. Credit card interest is based on the prime rate, with banks often referring to the rates and ‘prime rate plus’ and then adding a number to it to get the actual interest rate a borrower would pay.
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3. LARGE STORM HAMMERING NORTHEASTERN U.S.; SCHOOLS CLOSED, TRADING IMPACTED
A very large storm is hitting the northeastern U.S. this morning, closing schools in New York and Boston and affecting trading on Wall Street.
New York City is expected to get as much as 16 inches of snow with several inches already falling, according to the National Weather Service. Federal offices in Washington are expected to open three hours later than normal.
The storm is widespread, stretching from northern Ohio up through Maine into Nova Scotia in Canada. The entire northeastern U.S. will be affected.
Elsewhere, a freeze warning is in effect for a very large patch of land stretching east to west from extreme eastern Kansas through the Atlantic Coast in Georgia and north to south from northern Missouri almost to the Alabama Gulf Shores.
Temperatures are expected to fall into the mid-20s and lower teens this morning and overnight into Wednesday morning, the NWS said, which will harm uncovered winter wheat plants and peach trees.
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