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3 Big Things Today, January 16, 2020

Soybeans, Grains Fall in Overnight Trading; Ethanol Production Hits Fourth Highest on Record.

1. Soybean, Grain Futures Decline on Trade Skepticism

Soybeans and grains were lower in overnight trading on skepticism about the Phase One trade deal between the U.S. and China.

President Donald Trump and Chinese Vice Premier Liu He yesterday signed the agreement, under which China said it would increase purchases of U.S. goods by $200 billion from their 2017 levels in the next two years.

Of that, China said it would increase purchases of agricultural products by a total of $32 billion in 2020 and 2021, bump spending on manufactured items by $78 billion, and spend $38 billion more on services, according to U.S. government documents.  

In exchange, the U.S. said it would roll back some tariffs imposed on imports from the Asian country.

Still, most of the tariffs on Chinese goods will stay in place. Levies of 25% on $250 billion worth of Chinese goods will stay, as will tariffs on $100 billion worth of U.S. goods that China imposed. Some analysts said the Phase One agreement didn’t resolve several issues.

Vice President Mike Pence told Fox Business News that negotiators are already working on a Phase Two deal.

Soybean futures for March delivery fell 3¢ to $9.25¾ a bushel overnight on the Chicago Board of Trade. Soy meal futures declined 80¢ to $299.30 a short ton, and soy oil lost 0.1¢ to 33.20¢ a pound.

Corn futures for March delivery dropped 4¾¢ to $3.82¾ a bushel.

Wheat futures for March delivery fell 7½¢ to $5.65¾ a bushel overnight in Chicago, while Kansas City futures plunged 9¢ to $4.87½ a bushel.

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2. Ethanol Production Jumps to Highest Level Since June, Fourth-Highest Total on Record

Ethanol production in the U.S. climbed to the highest level in seven months last week, and stockpiles also increased in the seven days through January 10, according to the Energy Information Administration.

Output jumped to an average of 1.095 million barrels a day from 1.062 million the previous week, the EIA said in a report. That’s the highest level since the week that ended on June 7, and the fourth-highest total on record, government data show.

In the Midwest, by far the largest-producing region, production of the biofuel surged to 1.012 million barrels a day, on average. That’s up from 984,000 barrels a day the previous week.

East Coast output also increased, rising to 28,000 barrels a day from 25,000 the previous week. Gulf Coast production rose to 25,000 barrels a day, on average, from 22,000 barrels.

Rocky Mountain output was unchanged at an average of 14,000 barrels a day.   

Production on the West Coast, however, declined to 16,000 barrels a day from 17,000 a week earlier, the EIA said in its report.

In other news, the USDA will release its weekly Export Sales Report this morning.

Analysts are expecting corn sales from 500,000 to 950,000 metric tons, soybean sales from 400,000 to 850,000 tons, and wheat sales from 200,000 to 500,000 metric tons, researcher Allendale said in a morning note.  

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3. Winter Storms Expected From Texas to Minnesota Heading Into the Weekend

Winter storms are forecast from the Texas panhandle north into Minnesota this morning, according to the National Weather Service.

In eastern Nebraska and western Iowa, as much as 3 inches of snow are expected along with a “light glaze” of ice, the NWS said in a report early this morning.

Temperatures likely will rise above freezing at some point tomorrow, which will lead to periods of drizzle. Extremely cold weather will move into the region Friday night, which could freeze any precipitation that forms on the ground, the agency said.

Farther south in Missouri, a mix of freezing rain, sleet, and snow are possible starting this evening and lasting through Friday morning.

As much as a tenth of an inch of freezing rain is likely along with a dusting of snow. Travel could become dangerous if ground temperatures drop below freezing, the NWS said.

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