The grain and oilseed markets were quiet Wednesday morning, ahead of the Fed rate announcement at 1:00 p.m. CST. The widely expected rate increase would likely lead to a stronger dollar, hurting exports. The yuan inched toward six year lows at 6.47 against the dollar after their central bank announced its decision to de-peg from the US dollar, opting instead to be backed by broader set of currencies. Argentina plans to devalue their currency this week to no more than 15 pesos per US dollar, in efforts to gradually cause their official and black market exchange rates to converge, creating more fair pricing mechanisms. Some fear it will send their already 25% inflation soaring higher. Support for the march corn can be found at 3.73 and resistance at 3.805. Crude oil was lower and Dow futures point to a higher open. March corn futures moved 0.25 cents lower to $3.77 early Wednesday morning, while May was unchanged at $3.8225.
Soybean futures were flat Wednesday morning on the cusp of the long-awaited Fed rate decision where rates are expected to rise for the first time in nearly a decade. U.S. soybean crush surprisingly slowed during November, according to NOPA’s report. U.S. domestic November NOPA crush came in near 156 million bushels, down from about 159 in October, and the lowest November NOPA crush since 2011. Chinese soybean imports for November came in at 7.39 million tonnes, 33.6% higher than October and 22.6% higher than a year ago. Year to date, their imports are at 72.57 million tonnes, while the USDA’s forecast for China’s imports is 80.5 million tonnes. Argentina’s measures to devalue their currency this week will be pivot in assessing their export market share. January soybeans were .75 cents higher to $8.6775 early Wednesday, while Jan soyoil lost 23 points to 30.47 cents per pound and January meal lost $0.20 to $271.60.
Wheat futures climbed out of early morning weakness to close higher on the session. March Chicago futures tested first resistance of $4.98 before selling at $4.94 ¼. Lack of new data will continue to weigh on prices as ample supplies and bearish fundamentals drive the market. Enhanced Argentine exports are only adding to the ideas of ample world supplies. The stronger dollar will continue to add pressure to US wheat making it less competitive on the world trade scene. The Dollar index roles after data showed US inflation rose in November. Tuesday saw investors sitting on the sidelines waiting for direction for the US dollar as the Federal Reserve will make an announcement Wednesday on interest rates. Weekly wheat export inspections beat the estimates at 434,767 tonnes, though the export pace for wheat remains at its slowest since 1972. Russia Ag ministry sees their 2016 crop at 104 million tonnes, 4 million higher than the estimate of SovEcon and above their 2015 harvest of 103 million tonnes. El-Nino has caused the downgrade of Australian winter wheat to 23.3 mmt this year from 23.7 harvested in 2014. The South African crop estimate committee trimmed its forecast for 2015 wheat production by 0.3% tp 1.501 mmt citing the continued drought in Free State Province. March CBOT wheat futures closed ¾ cents higher to $4.94 ¼ per bushel Tuesday, while Mar KC wheat gained 4 ¼ cents to $4.92 ¼, and March MWE climbed 2 ¼ cents to $5.12 ¾.
Live cattle futures gain 1% on short covering and early bids in the cash market. Concerns about cattle demand, including steady declines in the US beef market have given processors little incentive to bid higher for livestock. Packers have also slowed purchasing amid worries that Canada and Mexico will restrict purchases of US supplies on the back of the beef-labeling ruling by the World Trade Organization against the US. Boxed beef cutouts were mixed Tuesday with choice down 1.14 to 197.64 and select up 2.42 to 189.15. Cattle slaughter this week is at 226,000 head up from 224,000 head last week and 224,000 the prior year. Poor weather conditions including rain and snow may slow operations. February live cattle gained 0.50 cents to 124.90 cents/pound at the close Tuesday, while April futures gained 0.375 to 125.6755. January feeder cattle fell 0.125 cents lower to 148.025 cents/pound Tuesday, and March feeders lost 0.15 cents to 146.35.
Nearby lean hogs remain under pressure on technical selling as February prices hit triple digit losses. Large slaughter number and forecasts for record production weigh on nearby prices. Hog slaughter last week was at 2,426,000, compared to 2,424,000 last week and 2,262,000 a year ago. Slaughter this week is at 879,000 head, after Monday’s biggest one day kill since 452,000 on April 13. Potential for last minute holiday ham orders by retailers will be faced with competition from beef and poultry. The increased holiday demand may support futures in the near term, though seasonal increases in hog numbers combined with the early year fall-off in demand could signal lower prices. February futures settled at 58.825 cents down 1.30 cents/pound on the close Tuesday, while April hogs lost 0.325 to 64.10.
Cotton futures were mixed Wednesday morning. Last week, cotton production was lowered to 13.03 mil (480 lb bales), down 2% from last month and down 20% from last year. Domestic milling remained unchanged, yet exports were reduced 200,000 based on lower available supply and lagging sales today. Yield is expected to average 768 lbs per harvested acre, down 70 lbs from last year and down 14 pounds/acre from their Nov estimate. Global projections show lower production, consumption and ending stocks compared to November. Global production is down 1.9 mil bales. Projected world trade is up 1.0 mil bales. World ending stocks are now projected at 1.7 mil bales down from last month’s 104.4 mil bales projection. Mar cotton moved .10 higher to 63.41 cents/pound, while May cotton gained 0.12 to 64.20 cents/pound