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3 Big Things Today, May 18

Soybean Futures Plunge Overnight; Ethanol Production Rises to Highest Since March

1. Soybeans Drop Almost 20 Cents Overnight on Decline in Brazilian Real

Soybeans and grains plunged in overnight trading on the Chicago Board of Trade after the value of Brazil’s currency dropped amid a presidential scandal.

Brazil’s real plummeted amid allegations that the country’s president was involved in a cover-up scheme involving a former speaker of the house in Congress who’s now in jail. Newspapers report a recording proving a payment from President Michel Temer to the man behind last year’s impeachment of then-President Dilma Rousseff.

The South American country’s currency plunged yesterday, and analysts expect it will do so again today. A weakened real makes Brazilian products more attractive to overseas buyers, which may mean fewer export opportunities for U.S. goods.

Brazil is expected by the U.S. Department of Agriculture to produce a record 111.6 million metric tons of soybeans this year, though private estimates put the crop at 113 million tons.

Soybean futures for July delivery fell 19¼¢ to $9.56½ a bushel overnight on the Chicago Board of Trade. Soy meal declined $4.90 to $310.40 a short ton, and soy oil futures lost 0.57¢ to 32.58¢ a pound.

Corn futures dropped 6¼¢ to $3.65¼ a bushel in overnight trading.

Wheat for July delivery fell 3¾¢to $4.23¼ a bushel, while Kansas futures declined 3½¢ to $4.23 a bushel.


2. Ethanol Production Rises to Highest Level Since March; NCGA Wants Use Higher

Ethanol production surged to the highest level in seven weeks, the second consecutive increase, and inventories rose in the seven days that ended on May 12, according to the Energy Information Administration.

Production has been on a tear the past couple of weeks, rising to an average of 1.027 million barrels a day in the U.S., the EIA said in a report. That’s the highest level since March 24.

Output had dipped to 986,000 barrels a day, on average, in the last week of April, tying for the lowest level since October. Production has risen pretty steadily in May, however, amid increased demand.

The increased production has led to larger stockpiles, which rose to 23.414 million barrels, according to the EIA. That’s the highest level since the end of March and up from 23.055 million the prior week.

The National Corn Growers Association wants use of the biofuel to expand. The group yesterday issued a memo encouraging the EPA to authorize year-round access to higher blends of ethanol including E15.

The EPA previously issued a waiver for 10% ethanol blends. “Providing E15 with the same waiver would lead to more choices at the pump and cleaner air,” the NCGA said.

The group also encouraged the EPA to update its lifecycle analysis for corn-based ethanol. It said in 2010 that the biofuel would produce 21% fewer GHG emissions vs. gasoline by 2022, and other agencies have updated their analyses while the EPA hasn’t.

The Department of Agriculture, for example, said this year that corn-based ethanol results in 43% fewer GHG emissions than gasoline, according to the NCGA

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3. Thunderstorms Expected Today in Parts of Southern, Central Plains May Bring Tornadoes

Storms are expected to blow into parts of the Southern and Central Plains today, according to the National Weather Service.

In the Southern Plains where hard red winter wheat is in final development stages, thunderstorms are expected to bring rain, hail, and strong winds. The NWS said in an early Thursday report that there’s a “significant” risk of tornadoes, wind damage, and lightning.

“Thunderstorms are expected to develop east of a dry line this afternoon and trek eastward into the evening hours,” the NWS said. “The strongest storms will be capable of producing hail around 2 inches, winds over 60 mph, and an occasional tornado. Other storms are expected across west-central Kansas but look to be not as dangerous.”

Showers are forecast for much of central and southeast Nebraska today and tonight, which will likely delay planting of corn and soybeans.

Some of the storms may become strong with large hail and lightning the primary concerns. Another round of showers is expected to start on Friday afternoon and evening, which could lead to minor flooding along the Missouri River, the NWS said.

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