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3 Big Things Today, February 6

Beans, Corn Higher in Overnight Trading; Money Managers Less Bullish Across the Board

1. Soybean, Grain Futures Higher in Overnight Trading on Demand

Soybeans and corn were higher overnight on signs of demand for U.S. supplies.

China is reportedly in the market for soymeal since dried distillers’ grains are so hard to come by in the country, and U.S. ethanol producers are putting out biofuel at a record pace.

China last month increase tariffs on imports of DDGs in a bid to protect domestic ethanol producers, meaning livestock producers in the country are scrambling for alternatives, including soy meal. That, in turn, is boosting soybean futures.

U.S. ethanol producers increased production to a record in four of the past five weeks, according to the Energy Information Administration, boosting demand for corn.

Soybean futures for March delivery rose 8¾¢ to $10.35¾ a bushel overnight on the Chicago Board of Trade. Soy meal futures gained $2.60 to $334.20 a short ton, and soy oil added 0.27¢ to 34.13¢ a pound.

Wheat for March delivery gained ¼¢  to $4.30½ a bushel in Chicago; Kansas City futures rose 2½¢ to $4.43 a bushel.


2. Money Managers Less Bullish on Grains, Soybeans Last Week

Money managers were less bullish across the board on grains and soybeans last week as concerns about trade wars lingered.

Speculative investors were net-long 159,467 soybean contracts in the week that ended January 30, according to the Commodity Futures Trading Commission. That’s down from 186,103 contracts the prior week.

Investors were still net-long corn futures, but only by 4,828 contracts, well below the prior week’s 17,760 contracts, the CFTC said. Net-long positions in hard-red winter wheat fell to 17,370 contracts, the first decline since mid-December and below the prior week’s 27,550.

Investors were net-short soft-red winter wheat by 107,726 contracts, above the previous week’s 100,372 contracts, according to the CFTC.

Concerns about trade wars with several countries including Mexico have loomed over commodities prices recently as the Trump administration has said it will impose import taxes on goods from China and Mexico, which it says will help pay for a wall along the border.

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3. Red Flag Warning Issued for Southern Plains Due to Extremely Dry Conditions

A red flag warning is in effect for much of the southern Plains due to high winds and extremely dry conditions.

Relative humidity is extremely low in much of the Oklahoma panhandle, almost all of west Texas, southwestern Kansas, and eastern New Mexico. Winds are expected to range from about 25 mph to 35 mph, creating very dangerous conditions, according to the National Weather Service.

“A red flag warning means that critical fire weather conditions are either occurring now or will shortly,” the NWS said. “A combination of strong winds, low relative humidity, and warm temperatures will create favorable weather for rapid fire growth and spread.”

Open fires and even sparks should be avoided as they could start fast-spreading fires, the agency said in a report on Monday morning.

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