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3 Big Things Today, January 31

Soybeans Slightly Higher Overnight; Ethanol Production Falls to Three-Week Low.

1. Soybeans Modestly Higher Overnight as Trade Talks Continue

Soybeans were cautiously higher while grains were little changed as trade talks between the U.S. and China enter their second day.

A Chinese delegation led by Vice Premier Liu He met with an American team led by U.S. Trade Representative Robert Lighthizer in a bid to come to an agreement on several issues including intellectual property, the widening U.S. deficit to China, and agriculture.

Liu is scheduled to meet with President Donald Trump today.

Treasury Secretary Steven Mnuchin said before the negotiations that he believes “significant progress” can be made this week, though Commerce Secretary Wilbur Ross said last week that he doesn’t believe a deal will be hammered out as the countries are “miles and miles” apart on several issues.

Negotiators have until early March to come to an agreement or the Trump administration has said it will raise tariffs on more than $200 billion worth of Chinese goods to 25% from their current level of 10%. China would likely retaliate with trade barriers of its own.

Soybeans for March delivery rose 2¾¢ to $9.23¾ a bushel overnight on the Chicago Board of Trade. Soy meal gained $1.30 to $312.40 a short ton, and soy oil declined 0.09¢ to 30.33¢ a pound.

Corn fell ½¢ to $3.80¾ a bushel overnight

Wheat for March delivery lost 1¼¢ to $5.15½ a bushel, while Kansas City futures declined 1¾¢ to $5.00½ a bushel.


2. Ethanol Production Falls to Lowest in Three Weeks, Stockpiles Rise to Highest Since October

Ethanol production in the seven days that ended on January 25 declined to the lowest level in three weeks, according to the Energy Information Administration.

Output last week averaged 1.012 million barrels a day in the U.S., the EIA said in a report. That’s down from 1.031 million the previous week and the lowest since January 4.

Midwestern production, by far the biggest in the country, declined to an average of 942,000 barrels a day from 957,000 barrels, the agency said. That’s also the lowest since the first week of January.

Gulf Coast output fell to 12,000 barrels a day from 16,000 barrels, and ethanol-makers in the Rocky Mountain region decreased production by 1,000 to 13,000 barrels a day, on average, the EIA said.

On the East Coast, output averaged 25,000 barrels a day, up from 24,000 a week earlier, and on the West Coast, production was unchanged at 20,000 barrels a day.

Inventories, meanwhile, jumped to the highest level since October.

Ethanol stockpiles totaled 23.98 million barrels last week, up from 23.501 million seven days earlier and the highest since October 12, the EIA said.

In other ethanol news, Mike Dwyer, the chief economist for the U.S. Grains Council, said at the Iowa Renewable Fuels Summit in Altoona, Iowa, that he expects ethanol exports to reach a record 4 billion gallons in 2020.

If his forecast comes to fruition, that would be more than double the current record of 1.62 billion gallons set in the 2017-2018 marketing year that ended on August 31.

China, which now has a 70% tariff on ethanol, is a target, as it needs to increase its imports if it wants to meet its self-imposed mandate to blend 10% ethanol into its gasoline by 2020, Dwyer said.


3. Deep Freeze Continues as Polar Vortex Moves Slightly North, East; Wind Chills at -45˚F.

The deep freeze continues as wind chill warnings are still in effect in the northern U.S., though the cold has shifted to the north and east a bit.

Warnings continue from central North Dakota south into central Illinois and Indiana and into northeastern states, according to the National Weather Service.

In northern Illinois and Indiana, “dangerously” cold wind chills are expected today, reaching as low as -45˚F., the NWS said in a report early this morning. The warning in the area is in effect until noon.

In western Michigan, along the coast of Lake Michigan, a winter storm warning is in effect along with the wind chill warning. Up to 2 inches of snow will accumulate in the area today, and wind chills will fall to -35˚F. The lake-effect snow will reduce visibility to as little as a half mile today, the agency said.

In north-central Ohio, wind chills will be as low as -25˚F. today, which warnings in effect until 4 p.m., according to the NWS.

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