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3 Big Things Today, July 7

Wheat Falls Again Overnight; Ethanol Production Steady as Stockpiles Decline.

1. Wheat Futures Continue Declines Overnight Heading Into Weekend

Wheat prices continued their decline in overnight trading as investors who were long the market sell more contracts after prices on Wednesday hit a two-year high.

Chicago futures had risen six straight days to the highest level since July 2015 before a sell-off that started yesterday. Some investors may be liquidating their positions ahead of the weekend, analysts said.

Nothing’s changed fundamentally in the U.S. as hot, dry weather continues to plague the Northern Plains. Little rainfall is expected in the region for at least the next week.

In Ukraine, however, a storm system is now forecast to bring rain to crops next week, according to Commodity Weather Group. Rainfall in China also will help crops, the forecaster said.  

Corn and soybeans also declined, though losses were limited.

Wheat for September delivery fell 5¾¢ to $5.33¼ a bushel overnight on the Chicago Board of Trade. Kansas City futures declined 7¢ to $5.39½ a bushel.

Corn for December delivery lost a penny to $4.01¾ a bushel in Chicago.

Soybeans for November delivery fell 2½¢ to $9.96¾ a bushel overnight. Soy meal lost 80¢ to $330.50 a short ton, and soy oil futures declined 0.27¢ to 33.11¢ a pound.

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2. Ethanol Production Little Changed, Stockpiles Drop to Lowest Level Since January

Ethanol production was down slightly from the week before, while inventories dropped to the lowest level since January.

Output in the week that ended on June 30 averaged 1.014 million barrels a day, down from 1.015 million a week earlier, according to the Energy Information Administration (EIA).

Stockpiles of the biofuel, however, declined to 21.571 million barrels last week, the lowest level since the week that ended on January 13, EIA data show. Inventories have dropped for three straight weeks.

The Environmental Protection Agency (EPA) earlier this week released its Proposed Volume Standards for biofuels that included requirements for renewable fuel use in 2018.  

The most important part of the report was that the ethanol blend mandate was left untouched at 15 billion gallons. Overall, the volume requirement for total renewable fuels fell by 40 million gallons to 19.24 billion, according to the EPA.

The agency noted in its report that ethanol supply isn’t limited by production. Instead, it’s constrained by the amount of gasoline used, the amount of ethanol that can be blended into gasoline under the E10 blend wall, the number of retail stations that offer E15 and E85, and the number of vehicles that can legally and practically consume E15 or E85.

Relative pricing of E15 and E85 vs. E10 and the ability of RINs to affect the price are other factors, along with the supply of gasoline available that contains no ethanol, the EPA said.

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3. Storms Likely in Parts of Indiana, Kentucky, Missouri Today; Temperatures Remain High

Some storms are likely in much of southern Indiana, southwestern Indiana, western Kentucky, and southeastern Missouri this morning, along with dense fog that’s reducing visibility this morning, according to the National Weather Service.

The storms will be isolated and most likely will hit this afternoon and evening. Severe weather is possible with damaging wind and hail the biggest concerns, the NWS said in a report early Friday morning.

It’s likely going to be extremely warm this weekend in much of the Midwest with temperatures in eastern states well into the 90s with some triple digits possible. In Iowa, temperatures will top out in the low-90s this weekend with some storms possible on Sunday.

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