Market Closes - December 17, 2014

Posted on Dec 17, 2014
CBOT futures closed higher with wheat soaring on technical buying which started with continued concerns Russia will limit exports. Corn and soybean futures were little changed even as funds were reportedly net buyers. Soybean futures are weighed down by ideas the South American bean crop is getting bigger given favorable weather forecasts. Chart watchers see March Corn having potential to challenge the $4.23-4.26 chart gap posted on July 7.

Feeder Cattle futures dropped the $3.00 limit for the 5th day. The traders who are trapped in long positions probably are selling Live Cattle futures to “hedge” their Feeder position. LC started limit down today, rallied to erase the loss before lunch, but closed near the lows. Cash cattle and beef markets are not following LC futures down as quickly. Choice carcasses down 0.47 at 242.41; Select down 3.12 at 231.13. Just as the speculators drove cattle futures higher than may have been warranted, it’s likely cattle futures will drop too far.

Lean hog futures started the day limit-down $3.00, erased most of the loss by lunch, and then headed back down in the afternoon. Falling pork values will keep the pressure on LH futures. FOB Plant Pork dropped 1.74 to 87.24 – the drop would be more if not for a 7 pct rise in belly value. This cutout was 93.46 on Monday afternoon.

The Federal Reserve Open Market Committee’s post-meeting statement was slightly more dovish than some expected. It kept the language suggesting interest rates will stay near zero for a “considerable period”. As a result, the stock market rallied sharply based on continued easy money for the U.S. economy. The FED’s rate has been near zero percent for six years. Treasury yields increased as money flowed back to equities with “risk on” trade.

Corn Mar +2 408; Jly +2 423; Dec +1 432 Bean Jan +3 1027; Jly +5 1047; Nov +7 1009 Meal Jan +3 359; Jly +2 344 Oil unch 3177 Wheat Mar +25 648; Jly +21 647 KC +27 681; MGE +25 660 Oats +1 315 Rice +3 1211

LC Dec -255 15642; Feb -292 15582; Jun -147 14817 FC All limit down $3.00 for 5 straight days Jan 21660; Mar 21225; Aug 21222 LH Feb -120 8047; Apr -152 8190; Jun -125 8890 Milk Jan +17 1575; Feb +13 1528

US$ +1.2%

Dow +288 17357 SP +40 2013 NAS +96 4644 Tran +73 8814 VIX -4.13 19.44 -17%

WTI -10 5616 Brent +63 6064 Gas +1 155 NG +8 370 HO +3 199 Eth +3 162 Gold -5 1189 Slvr -1 1574

2-yr +.057 0.617% 5-yr +.083 1.609% 10yr +.065 2.136% 30yr +.028 2.730%

TAX EXTENDERS LEGISLATION PASSED Yesterday, the Senate passed Farm Bureau-supported legislation (H.R. 5771) extending a number of key tax provisions, including those related to small business expensing and bonus depreciation. The “Tax Increase Prevention Act of 2014” is awaiting the President’s signature to become law. Small business provisions like Section 179 and a 50-percent bonus depreciation increase cash flow, and that lets farmers put their money back to work immediately. Section 179 maintains for 2014 the $500,000 expensing limitation, the level that’s been in effect since 2010. Without H.R. 5771, the limitation would have reverted to $25,000 for 2014. These extensions do not apply for the 2015 tax year.

The “Tax Increase Prevention Act of 2014” also has provisions that encourage the production and use of clean, renewable energy. This includes the $1.00 per gallon production tax credit for biodiesel.

Farm Bureau has worked vigorously for extension of these important tax provisions. Farm Bureau will continue to pursue long-term solutions next year in the 114th Congress so Kentucky’s small businesses like farms can have the certainty they need to plan for the future.

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Tagged Post Topics Include: Economics, Market updates