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3 Big Things Today, April 9, 2020

Wheat Futures Rise Overnight; Ethanol Production Falls to Lowest Level on Record.

1. Wheat Futures Surge on Potential Demand for U.S. Supplies

Wheat futures surged again overnight amid demand for food globally and as some countries reduce export to ensure domestic stockpiles.

Demand for world food staples including wheat and rice have jumped due to increased panic buying as the COVID-19 pandemic continues to spread.

While demand increases, shipments from some countries have been stalled. In Russia, the government implemented a short-term ban on exports of processed grains last month, but has since walked back the restrictions. Still, its government said it’s reviewing the situation on a week-to-week basis.

In Argentina, workers recently blocked ports to demand improved safety conditions to avoid getting the disease. S&P Platts, citing a report from Bolsa de Comercio de Rosario, said the water level of the Parana River is the lowest since 1989, meaning grain-carrying ships must reduce the size of their loads, which also could slow shipping from the South American country.

The turmoil globally may push buyers to seek supplies from the U.S.

Investors as always are keeping an eye on the COVID-19 pandemic.

Still, the number of confirmed cases globally rose to 1.49 million from 1.44 million yesterday, according to Johns Hopkins University. The death toll is now up to 88,982 from 82,991 a day earlier.

More than 332,486 people have recovered, the university said.

In the U.S., the number of cases stands at 432,438, up from 399,929 yesterday, the university said. The death toll is now up to about 14,8000 from 13,000 on Wednesday.

Wheat futures for May delivery rose 6¼¢ to $5.54½ a bushel overnight on the Chicago Board of Trade, while Kansas City futures added 8¼¢ to $4.86¼ a bushel.

Corn futures for May delivery rose 2¢ to $3.32 a bushel.

Soybeans added 3½¢ to $8.57½ a bushel. Soy meal gained 70¢ to $293.50 a short ton, while soy oil rose 0.2¢ to 27.38¢ a pound.

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2. Ethanol Production Drops to Record Low While Stockpiles Hit Highest Ever

Ethanol production dropped to the lowest on record last week amid a decline in demand for gasoline.

Output of the biofuel plunged to an average of 672,000 barrels a day, down from 840,000 a week earlier, in the seven days that ended on April 3, according to the Energy Information Administration.

In the Midwest, by far the biggest-producing region, output averaged 629,000 barrels a day, the EIA said in a report. That’s down from 778,000 barrels a day, on average, the previous week and also a record low.

East Coast production fell to 16,000 barrels a day from 20,000 barrels a week earlier, and Gulf Coast output plunged to an average of 14,000 barrels a day from 21,000 barrels.

Rocky Mountain output fell to only 6,000 barrels a day from 11,000 a week prior, and West Coast production dropped to 7,000 barrels a day from 10,000 barrels, the EIA said in its report.

Gasoline consumption in the U.S. last week fell to the lowest level since 1969, according to the agency, as commuters work from home and people shelter in place in a bid to stop the spread of COVID-19.

POET Inc., the world’s biggest producer of ethanol, will idle plants in Ashton and Coon Rapids, Iowa, and in Chancellor, South Dakota, due to the downturn in demand. The company also will delay the start of operations at a new facility in Shelbyville, Indiana.

Chief Operating Officer Jeff Lautt said the company has slowed production at some of its other plants and has stopped buying corn at seven plants.

Stockpiles, meanwhile, are building.

Inventories on April 3 were at a record high of 27.091 million barrels, up from 25.717 million a week earlier, the EIA said in its report.

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3. Red-Flag Warning Issued in Nebraska, While Kansas and Missouri Likely to See Freeze

The Midwest is seeing some interesting weather this morning as a red-flag warning, indicating extremely dry conditions, was issued in Nebraska, while a freeze warning was put out in parts of Kansas and Missouri, according to the National Weather Service.

In much of central and eastern Nebraska and a few counties in northern Kansas, relative humidity is forecast from 15% to 25% this afternoon and early evening.

Winds are expected to be sustained from 20 to 30 mph with gusts of up to 45 mph, the NWS said in a report early this morning.

“Any fires that develop will spread quickly, be difficult to control, and exhibit extreme fire behavior,” the agency said.

Just south and east, a freeze warning has been issued for much of eastern Kansas and almost all of Missouri.

Temperatures will fall as low as 28˚F. overnight tonight into Friday, the NWS said in its report.

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