Headlines:
- USDA Rules Would Aim to Protect Livestock, Poultry Producers
With a little more than a month left in the Obama administration, the Agriculture Department announced new rules aimed at protecting the rights of livestock and poultry producers who do business with larger companies. USDA announced three rules. A rule effective immediately would make it easier for farmers to sue the companies they contract with over unfair practices. Two proposed rules would aim to protect the legal rights of growers and help poultry producers who say they are being unfairly targeted. It’s unclear whether the incoming Trump administration would side with the larger businesses or the smaller-scale growers when the 60-day comment period on the proposed rules ends. Trump hasn’t commented on the issue, though he has promised to get rid of many of the Obama administration’s regulations, calling them burdensome.
- Brazil faces short Robusta harvest in 2017 too, expert warns
Brazil could in 2017 suffer its third successive sub-par Robusta crop, thanks to a hangover from drought, leading commentator Carlos Brando said, as the country mulls enabling imports of the variety for the first time. The unexpectedly strong recovery in Brazil’s Arabica coffee output after drought two years ago should not lull investors into believing that Robusta production can make the same rapid revival too, said Mr Brando, a director at Brazil-based P&A Marketing, and an advisor to the likes of the World Bank.
Summary:
Yesterday the FOMC raised interest rates ¼% and took on a hawkish posture in saying that three more rate hikes were possible in 2017. In our December 9 ‘Post Market Wrap-up’ and in prior write ups we have been sharing that pullbacks in the US Dollar were in all likelihood great buying opportunities. The following chart is from our December 9 post.
We also highlighted that we believed the US Dollar stood a very good chance of reaching 103 as a minimum price objective. The reaction to the Fed rate hike pushed the US Currency to an intraday high of 103.56 and was sitting at 103.12 close to the NYSE regular session close. You can see in today’s chart how well our support at 99.70 held and ended up being a great price level for position sizing.
In light of the strength of the US Dollar today and yesterday; analyst, news outlets and the like have largely credited the perceived weakness in some of the grain markets to have been the US Dollar. Soybean futures closed higher off of support today but Corn and Wheat were under pressure one hour after the Grain session open. According to the USDA, Corn sales topped 1.5 million metric tons which was up 1% week-over-week and up 8% from the average. Wheat sales rose 6% from the previous week but were down 7% from the average. Earlier in the week Wheat was looking to maintain some support from concern over winterkill vulnerability. The cold temperatures from the winter vortex are still in forecast but snowfall in the US Southern plains may provide some protection by providing a layer of protection over the winter plants.
