Fed Raises Interest Rate

The grain markets have been fretting about the Federal Reserve raising interest rates for months. About 1:10 this afternoon it was announced that the Fed raised interest rates a quarter percent. Most traders thought an interest rate hike would increase the value of the dollar, putting more pressure on the grains. Corn was down 6-7 cents when the announcement was made and closed down 5-6. Maybe the interest rate hike was "in the market." The Dollar Index rallied a bit just after the announcement and sold off rather quickly. About 1:45 it was down about 45 ticks. One of the keys to getting a rally going in corn and beans is to have the Dollar Index continue to fall.

Trading was very similar in beans too. Beans were down 7-8 cents when the Fed announcement was made. Beans rallied off the lows closing 4-5 cents lower. Beans are still holding the lows set back in August but we are close. It was also announced that the Argentina government was going to devalue their currency the peso. That would make their beans more competitive on the world market. However, their economy is already in shambles with a 30 percent inflation rate. If their farmers need cash they will likely sell beans. If not why would they sell beans, hold the cash and lose 30 percent of the value? There might not be a rush to unload beans on the world market.