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3 Big Things Today, June 4, 2020

After two previous higher sessions, soybean prices slip.

1. Ag markets trend higher, dollar lower

After adding 17¢ in the last two trading sessions, the soybean market is taking a pause, in overnight trading. 

Traders have this morning's Weekly Export Sales Report to digest at 7:30 a.m. CDT. Also, the U.S. crop weather remains favorable across the Corn Belt. No threatening weather is foreseen for most of June, according to weather experts.

In overnight trading, July corn futures are 1¾¢ higher at $3.25¾; December corn futures traded up 1¢ at $3.39¼.  

July soybean futures are ¼¢ lower at $8.57¼; November soybean futures traded ¼¢ lower at $8.66.

July wheat futures are 5½¢ higher at $5.17.

In the outside markets, the U.S. dollar is lower, and the Dow Jones Industrials are expected to trade higher Thursday.

Al Kluis, Kluis Advisors, says wheat is leading the markets this week.

“Wheat managed to close 3¢ to 7¢ higher across the three exchanges on Wednesday after a rough start to the week. Soybean futures finished the day 6¢ to 7¢ higher. Traders see that the decline in the U.S. dollar and the increase in the Brazilian real has made U.S.-sourced soybeans a cheaper option on the global export stage. Corn settled nearly unchanged as the charts remain neutral and it is too early for any real damaging weather in the U.S.,” Kluis stated in a daily note to customers. 

Trade estimates for this morning's weekly USDA Export Sales Report are as follows (old crop plus new crop): corn is 450,000 to 1,200,000 metric tons; soybeans are 600,000 to 1,550,000 metric tons.

2. U.S. weekly ethanol demand rises

This week’s tally of U.S. ethanol production showed the largest amount of the renewable fuel made since March, according to the Energy Information Administration.

For the week ending May 29, ethanol production expanded by 5.7%, or 40,000 barrels per day (b/d), to 765,000 b/d — equivalent to 32.13 million gallons daily and the largest volume since March. 

However, production remains weaker due to COVID-19 disruptions, coming in 26.7% below the same week in 2019. 

The four-week average ethanol production rate increased 6.3% to 692,000 b/d, equivalent to an annualized rate of 10.61 billion gallons.

Ethanol stocks tightened by 3.0% to 22.5 million barrels, the lowest reserves since the first week of January. Inventories tightened across all regions except the Rocky Mountains (PADD 4). Total reserves are 0.3% below year-ago volumes.

The volume of gasoline supplied to the U.S. market, a measure of implied demand, moved up 4.1% to 7.549 million b/d (115.73 bg annualized). Gasoline demand remained 20% lower than a year ago.

3. The Stock market digests unemployment data, earnings reports 

On Thursday, the U.S. Weekly Jobless Claims Report is expected to show 1.84 million Americans filed for unemployment insurance, in the week ending May 29, 2020.

In the past 10 weeks, 40 million Americans have filed for unemployment benefits.

On Thursday, the ADP private payrolls report indicated that 2.7 million jobs were shed in May, less than feared.

As a result, the U.S. stock market is expected to trade higher, when it opens at 8:30 a.m. CDT.

Stock traders will also be digesting numerous company's earnings report.

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