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3 Big Things Today, June 20

Soybeans, Grains Lower Overnight; Ethanol Output Declines, Stockpiles Fall to 12-Month Low.

1. Soybeans, Corn Lower Amid Ongoing Trade Tensions

Soybeans and corn were lower overnight on continued concerns about next week’s meeting between the presidents of the U.S. and China.

President Donald Trump said he would meet with President Xi Jinping of China at the Group of 20 meeting in Japan. Ahead of that, officials from both countries are gathering to discuss an end to the ongoing trade war between the world’s two largest economies.

Still, there’s rightful skepticism about the meeting, as negotiations that droned on for months until May failed to bear fruit.

The U.S. has imposed additional tariffs on more than $200 billion worth of Chinese goods, and Trump has threatened to put levies on another $300 billion in wares if a deal isn’t reached.

China, meanwhile, has put tariffs on $60 billion worth of U.S. goods and has threatened retaliation against the U.S. in the form of additional taxes if tariffs are raised.

Soybeans for May delivery declined 5¼¢ to $8.98 a bushel overnight on the Chicago Board of Trade. Soy meal fell $1 to $315.90 a short ton, while soy oil lost 0.10¢ to 28.27¢ a pound.

Corn futures for May delivery dropped 1½¢ to $4.39½ a bushel overnight.

Wheat for May delivery fell 4¾¢ to $5.22 a bushel overnight, while Kansas City wheat declined 4¢ to $4.64 a bushel.

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2. Ethanol Production Falls Week to Week While Inventories Drop to Lowest in More Than a Year

Ethanol production declined week to week, while stockpiles dropped to the lowest in more than a year, according to the Energy Information Administration.

Output of the biofuel fell to an average of 1.081 million barrels a day in the week that ended on June 14, the EIA said in a report. That’s down from 1.096 million barrels a day, on average, the previous week.

Production in the Midwest, by far the biggest producer, declined to an average of 1.003 million barrels a day last week from 1.014 million.

Gulf Coast output declined by 4,000 barrels to an average of 22,000 a day, and East Coast production fell by 1,000 barrels to 27,000 a day, the agency said.

Rocky Mountain and West Coast production were unchanged week to week at 13,000 and 16,000 barrels a day, respectively, according to the government.

Ethanol inventories, meanwhile, dropped to 21.613 million barrels in the seven days that ended on June 14, down from 21.802 million the previous week and the lowest level since the week that ended on May 25, 2018, the EIA said in its report.

In other news, the USDA is scheduled to release its Weekly Export Sales Report this morning.

Corn sales are pegged from 300,000 to 900,000 metric tons, soybean sales are seen from 200,000 to 800,000 tons, and wheat sales are forecast from 200,000 to 500,000 tons, researcher Allendale said in a note this morning.

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3. Severe Weather Expected in Much of West-Central Kansas, Flooding Likely in Indiana

Severe weather is expected in much of west-central Kansas today, with the National Weather Service saying there’s an “elevated risk” of tornadoes, hail, and thunderstorms.

The rest of the Southern Plains looks hot and dry with temperatures hovering right around 100˚F. this afternoon, the NWS said. That should benefit hard red winter wheat farmers who are trying to get their crops out of the ground.

The winter wheat harvest in Kansas was only 1% finished as of Sunday, down from the prior five-year average of 12%. In Oklahoma, only 16% was completed, well behind the average of 56% for this time of year. In Texas, 42% was out of the ground, trailing the normal 56%, the USDA said.

Farther north, flash flood watches and flood warnings have been issued for almost the entire states of Indiana and Ohio, the NWS said in a report this morning.

Another inch to 2 inches may fall on top of the precipitation the region’s already seen.

“Heavy rainfall remains possible through this morning and early afternoon” in the states, the agency said. “Saturated ground from recent rainfall coupled with torrential rain that falls from slow-moving showers and thunderstorms could quickly run off and create flooding.”

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