We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Market Index, MBA Mortgage Refinance Index, MBA Purchase Index, and MBA Mortgage Applications at 6:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Interest Rate Decision, FOMC Economic Projections, Interest Rate Projection – Longer, Interest Rate Projection – Current, Interest Rate Projection – 2^nd Yr., Interest Rate Projection 1^st Year at 1:00 P.M., Fed Press Conference at 1:30 P.M., and Dairy Products Sales at 2:00 P.M.

The market is waiting for the Fed Announcement on interest rates. The street is expecting ¼ of a point hike. If rates stay unchanged traders will be concerned and thinking, what do they know? And how bad is it? If the Fed raises another ½ a point the public will not be happy.

Photo by Waldemar on Unsplash

On the Corn Front, the market faced a lower close in yesterday’s action and spillover in the overnight market despite the announced sale of 136 tons 9% mil. bu.) of old crop corn to China. Total announced sales to China since last Monday have reached 88 mil. China has been a buyer of US old crop corn 5 out of the last 6 days. Widespread rains are expected over central areas of Argentina the next 2 to 3 days. With their worst drought in decades the impact on this year’s corn and soybean crops will be minimal. So we will be spotting the Black Sea Corridor and “tar spot” killing corn in the Midwest and Plains. The fungal disease also known as Phyllachora maydis “tar spot” first appeared in Illinois in 2015. Since then farmers spotted the spread to Nebraska for the first time in 2021 and in Missouri, Kansas and South Dakota last year. Also the basis for the China buying spree was largely absent and behind last years pace by nearly 40%. Rumors that the Chinese would enter the market for flash sales. Market experts say China needs the corn as the country reopens after COVID and demand picks up. US corn is also cheaper as China’s corn price is nearly $10.50 a bushel higher. US corn prices have dropped to a competitive level globally, below Ukraine and Brazil, which is running out of corn supplies. This is attractive to Chinese end users who are shrewd buyers. In the overnight electronic session the May corn is currently trading at 627 ½ which is 2 ½ cents lower. The trading range has been 633 to 623 ¼.

On the Ethanol Front ethanol advocates warn of lower Iowa corn prices without pipelines. Income for Iowa farmers might decline $1.1 billion per year if the states ethanol plants are unable to capture and sequester their carbon dioxide with the help of proposed pipelines to transport it, according to a study commissioned by the Iowa Renewable Fuels Association, The study – by Decision Innovation Solutions of Urbandale = predicts that three-quarters of ethanol production in Iowa would leave the state without pipelines and that farmers could see a reduction in the price they get for their corn up to 75 cents per bushel. “The wealth that has been generated in today’s agriculture is mostly due to ethanol plants that have been built,” said Tim Rucker, a northeast Iowa farmer, in a press call to discuss the study’s findings. The association, which advocates for policies that benefit the ethanol industry, is releasing results of the study amid three pipeline proposals from companies that want to transport captured carbon dioxide from Iowa ethanol plants out of state for underground sequestration and other commercial uses. Those projects are threatened by pending legislation in the Iowa House that would impose new restrictions on them that would affect the companies’ ability to use eminent domain to force land easements and would allow counties to dictate where they can be built, among other provisions. “I hope that it does not become law the way it is because it would kill these projects and have a very scarily large detrimental impact on our industry,” said Monte Shaw, the associations executive director. There were no trades or open interest in ethanol futures.

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