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3 Big Things Today, June 16

Soybeans Fall on Global Economic Concerns; Ethanol Production Reaches Record Amid Demand

1. Soybeans Tumble as Investors Jump Amid Global Economic Concerns

Soybeans fell overnight as investors book profits amid slowing optimism about global growth.

Stock indexes have been under pressure for the past few weeks ahead of a British vote on whether to stay in the European Union or to exit the bloc, an issue known as Brexit. The issue has weighed on stocks worldwide as some politicians and business leaders say Brexit would hurt not only the UK’s economy but also global markets.

In remarks after the U.S. Federal Reserve’s Open Market Committee decided to leave interest rates unchanged for the fourth time this year, Fed Chair Janet Yellen said Brexit may have a profound impact on the U.S. economy and could weigh on futures economic policy.

"It is a decision that could have consequences for economic and financial conditions in global financial markets," Yellen said. "It could have consequences in turn for the U.S. economic outlook that would be a factor in deciding the appropriate path of policy."

Concerns that UK voters will leave the EU is weighing on investor confidence about growth, and that is weighing on commodities including soybeans, corn, and wheat.

Soybean futures for July delivery tumbled 11¼¢ to $11.44¾ a bushel on the Chicago Board of Trade. Soy meal lost $4.30 to $402.90 per short ton, while soy oil declined 0.23¢ to 31.73¢ a pound.

Corn futures for July delivery fell ¾¢ to $4.28¼ a bushel overnight.

Wheat futures for July delivery rose a ¼¢ to $4.77¾ a bushel in Chicago. Kansas City wheat added 1¼¢ to $4.58 bushel overnight.


2. Ethanol Production Reaches Record, Stockpiles Stagnate as Demand Jumps

Ethanol production set a new weekly record in the seven days that ended on June 10, the Energy Information Administration said in a report yesterday.

Ethanol companies produced 1.013 million barrels a day on average during the week, the EIA said, marking the fifth time that output has topped the 1 million mark in history – all since November.

The industry first topped the mark in the week that ended on November 20, then in the seven-day periods that ended on December 11, January 8, June 3 and, of course, last week. The news is good for farmers, as it boosts demand for corn.

While it would be logical to assume record output would lead to record inventories, that would not be the case. Inventories this week rebounded after last week falling to the lowest level since December, according to the EIA.

Demand for ethanol has been extremely strong as of late due to record purchases of gasoline. Use of gasoline in the week through June 10 rose 2% to 9.8 million barrels a day, matching a record set in 2007, EIA data show.

It stands to reason that increased gasoline demand means increased ethanol use. Purchases of both could only get stronger, as the summer driving season is just beginning.  

Discuss the ethanol Production and Stockpiles Reports in Marketing Talk.


3. Excessive Heat Warnings Issued as Index Forecast to Hit 111°

Weather maps are showing excessive heat warnings and advisories, and excessive heat watches have been issued for almost the entire central U.S.

Excessive heat warnings, the most severe, were issued for parts of northeastern Oklahoma and several counties along the Kansas-Missouri border near Kansas City, where heat indexes are expected to reach 111° between now and Friday, the National Weather Service maps show.

All of eastern Kansas, eastern Nebraska, almost all of Missouri, Arkansas, Louisiana, and east Texas are under heat advisories and excessive heat watches, according to the NWS.

“High temperatures on Thursday and Friday are forecast to be 10° to 15° above average across much of the Central and Southern Plains,” the agency said.

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