Written Commentary
MORNING COMMENTS
Macroeconomics:
Jerome Powell and the Federal Reserve are meeting again today to finalize their decision on the federal interest rate. Today the rate sits at 4.50-4.75% and the market is expecting a move down to 4.25-4.50% today. The decision will be released today at 1:00pm CST and a press conference is scheduled for 1:30 pm CST. As long at the Fed cuts the expected -25 basis points, the market will be mostly focused on the tone Jerome uses in the presser.
Ag Fundamentals:
The US dollar continues to hold strength against falling currencies around the world. The Brazilian Real hit record lows against the dollar this week. The Central bank of Brazil has been trying to get a grip on their currency by hiking lending rates. They may have to continue to increase those rates to offer the currency support. Expectations are that they will hike rates 100-125 basis points again in January. Brazil’s President Luiz Lula da Silva criticized the bank’s move hinting the government may step in with policy changes. Their government spending has increased 100% since 2012 and the Real has dropped from 0.60 to below 0.17 in that same time frame.
The Brazilian Real hits record low. Their central bank has failed to stabilize the currency due to concerns about government spending. The Real was above 0.60 in 2012, now below 0.17.
The Fed will most likely cut Federal interest rates today by -25 basis points. More or less than a -25 point move would cause a sharp reaction in the markets.
EXPORT & WORLD NEWS
Colombia woke up hungry this morning and bought 135K MT of US corn and 120K MT of US soybean meal.
Malaysian palm oil futures were down overnight 196 ringgit, at 4529.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
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