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3 Big Things Today, April 21, 2022

Wheat Futures Fall Overnight; Ethanol Output Drops to Lowest Since September.

1. Wheat Futures Fall in Overnight Trading

Wheat futures were lower in overnight trading amid some profit-taking by investors who were long the market, or had bet on higher prices.

Prices earlier this week hit the highest since March, which likely prompted some investors to sell their futures contracts and reduce or liquidate their positions as futures have been dropping all week.

Fundamentally, not much has changed.

Russia has intensified its attacks on Ukraine in a bid to capture eastern parts of the country. Talks between Russia and western countries have stalled, leaving embattled Ukrainian troops and soldiers with little hope that there will be an end to the fighting anytime soon.

In the U.S., little or no rain has fallen in a wide stretch of land from southern South Dakota south into West Texas, according to the National Weather Service’s precipitation page. That area includes the Oklahoma and Texas panhandles where hard-red winter wheat is growing.

In Kansas, the biggest U.S. producer of winter wheat, 67% of the state is suffering from some sort of drought, according to the U.S. Drought Monitor. Just over 2% is under an exceptional drought, which is centered on the southwestern corner of the state.

Oklahoma also is dry with 85% seeing drought conditions. Around 9% of the state is facing exceptional drought, the monitor said.

Corn futures also slid but remain above the $8-a-bushel mark after earlier this week breaching that level for the first time since 2012 due to the ongoing fighting in Ukraine and some planting concerns in the U.S.

Wheat for May delivery lost 7¼¢ to $11.90¼ a bushel overnight on the Chicago Board of Trade while Kansas City futures lost 8¢ to $11.61½ a bushel.

Corn futures fell 2¼¢ to $8.07¾ a bushel. 

Soybean futures for May delivery rose 2¢ to $17.19 a bushel. Soymeal rose 50¢ to $466.80 a short ton, while soybean oil futures added 0.54¢ to 79.29¢ a pound.

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2. Ethanol Output Falls to Almost Seven-Month Low

Ethanol output plunged to the lowest level in almost seven months last week, and inventories also dropped to multi-month lows, according to the Energy Information Administration.

Production of the biofuel fell to an average of 947,000 barrels a day in the week that ended on April 15, the EIA said in a report.

That’s down from 995,000 barrels the previous week and the lowest level since the seven days that ended on September 24, the agency said.

In the Midwest, by far the biggest producing region, output averaged 889,000 barrels a day, down from 935,000 barrels a week earlier and also the lowest since late September.

Gulf Coast production dropped to an average of 23,000 barrels a day from 24,000 barrels the previous week, the EIA said.

West Coast output fell to 8,000 barrels per day from 9,000.

East Coast production, meanwhile, was unchanged at an average of 12,000 barrels a day, and Rocky Mountain output was steady at 15,000 barrels a day, on average, the government said.

Ethanol inventories also fell week-to-week, dropping to 24.342 million barrels.

That’s down from 24.803 million barrels a week earlier and the lowest since the seven days that ended on January 14, the EIA said in its report.

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3. Extremely Dry Weather Again Forecast For Southern Plains

It’s extremely dry in much of the southern Plains and western Midwest, resulting in red-flag warnings from Nebraska south through the Texas panhandle and west into Arizona, according to the National Weather Service.

In the Oklahoma and Texas panhandles, winds will be sustained from 30 to 40 mph with gusts of up to 65 mph expected, the NWS said in a report early this morning. Relative humidity is forecast as low as 6%.

A red-flag warning is in effect from 1 p.m. through 9 p.m. local time today. Another warning is in effect from noon through 9 p.m. tomorrow.

In the western half of Nebraska, a red-flag warning will take effect tomorrow afternoon amid wind gusts of up to 50 mph and humidity as low as 10%, the agency said.

“Weather conditions will become favorable for rapid fire growth and erratic fire behavior,” the NWS said. “Fires may quickly become out of control.”

Farther north in North Dakota, meanwhile, a winter-storm watch will take effect Friday and last through the weekend.

Snow accumulations are forecast as high as 7 inches, and about 0.10 inch of ice also is expected. Wind gusts are projected to top 50 mph in western North Dakota this weekend, the NWS said.

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