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3 Big Things Today, August 2

Soybeans Drop in Overnight Trading; Ethanol Capacity Reaches Another Record.

1. Soybeans Drop on Trade Worries, Production Outlook

Soybeans were again lower in overnight trading on continued concerns about trade and forecasts for bigger-than-expected crops.

The ongoing trade spat with China continues to be a concern after reports this week that the Trump administration is pondering raising rates on proposed tariffs.

The president last month instructed trade representatives to find another $200 million in goods on which the U.S. could impose a 10% tariff. The reports this week said the administration is considering raising that levy to 25%.

That’s stoked fears that China will find more ways to retaliate. The Asian nation responded to the U.S. imposing duties on $34 billion worth of imports by putting levies on an equal amount of U.S. goods. It has since been devaluing its currency to make its products more attractive to overseas buyers.

INTL FC Stone released its crop survey results, and the firm projects corn yield at 178.1 bushels an acre and production at 14.562 billion bushels, according to Allendale. The USDA on July 12 pegged yield at 174 bushels an acre and output at 14.23 billion bushels, Allendale said. 

Soybean yield was projected by INTL FC Stone at 51.5 bushels an acre and production was seen at 4.574 billion bushels. That’s well ahead of the July USDA forecast for 48.5 bushels an acre and 4.31 billion bushels, respectively.

Soybean futures for November delivery dropped 6¼¢ to $8.95¾ a bushel overnight on the Chicago Board of Trade. Soy meal fell $1.20 to $334.80 short ton, and soy oil lost 0.19¢ to 28.76¢ a pound.

Corn futures for December delivery gained 2¾¢ to $3.82¼ a bushel overnight.

Wheat for September delivery rose 8¼¢ to $5.66½ a bushel in Chicago, while Kansas City futures gained 9½¢ to $5.73¼ a bushel.

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2. Ethanol Capacity Again Reaches Record on Reporting Changes, Plant Improvements

Ethanol production capacity in the U.S. continues to grow, as it reached another record at the start of the year, according to the Energy Information Administration.

Fuel ethanol output capacity reached more than 16 billion gallons per year, or 1.06 million barrels a day, on average, at the beginning of 2018, the EIA said in a report released yesterday. Total listed capacity – so-called nameplate capacity – of operable ethanol plants rose 5% in 2017.

“Part of the increase in nameplate fuel ethanol production capacity in the most recent report is the result of EIA’s outreach to survey respondents that were operating at levels higher than their listed production capacities, which had resulted in utilization rates higher than 100%,” the agency said.

In prior surveys, respondents reported original design capacity and may not have accounted for expansions and modifications at their facilities. This year, some increased their stated production capacity to be consistent with the government’s definition.

“The remaining increase in production capacity was a result of plant improvements and process modifications such as equipment upgrades, plant expansions, improved maintenance routines, and installation of new equipment at some facilities,” the EIA said.

Total capacity in the Midwest was 14.8 billion gallons a year at the start of 2018, or 967,000 barrels a day, on average. Of the top 13 fuel ethanol-producing states, 12 are in the Midwest. The top three states – Iowa, Nebraska, and Illinois – contain more than half of the nation’s total ethanol capacity, the agency said.

Production, meanwhile, fell to 1.064 million barrels a day, on average, in the seven days that ended on July 27, according to the EIA. Output in the Midwest fell to 979,000 barrels a day from 985,000 barrels a week earlier.

Stockpiles rose to 21.967 million barrels last week, up from 21.653 million and the highest level in three weeks, the agency said.

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3. Slight Chance Storms in Central Nebraska, Kansas Bring Hail Today, This Weekend

Storms in central Nebraska and a few counties in north-central Kansas may bring hail and rain to the area, according to the National Weather Service.

“There is a slight chance that a thunderstorm or two could affect areas east of a line from Greeley to York (Nebraska) early this morning,” the NWS said in a report early Thursday morning. “Small hail will be possible if any stronger storms occur.”

The possibility of thunderstorms exists each day from Friday through Wednesday, the agency said. The best chance will be Friday evening when wind gusts could reach 45 mph and hail is possible.

Even more severe storms are expected on Saturday when hail as large as golf balls and wind gusts of more than 60 mph are possible, the NWS said.

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