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3 Big Things Today, December 13

Soybeans Lower Despite China Buy; Ethanol Production Falls to Three-Week Low.

1. Soybeans Modestly Lower Despite Reported China Buy

Soybeans were slightly lower despite reports that China finally bought U.S. supplies, while wheat neared three-month highs on demand.

After reaching six-month highs yesterday after Reuters said China bought more than 1.5 million metric tons of U.S. soybeans, prices overnight took a breather. Some investors booked profits, while others likely want to ensure the positive momentum will continue.

Analysts said the focus is now on trade negotiations between Washington and Beijing to see if a permanent deal can be worked out to reduce tariffs on imports of U.S. agricultural products.

Soybeans for January delivery fell 1¾¢ to $9.18¼ a bushel overnight on the Chicago Board of Trade. Soy meal gained 40¢ to $313 a short ton, and soy oil declined 0.19¢ to 28.85¢ a pound. 

Corn futures for December delivery rose ½¢ to $3.85¾ a bushel.

Wheat futures, meanwhile, neared the highest prices since September on signs of global demand. Egypt, despite having some issues paying suppliers, has been in the market recently.

U.S. exporters in the seven days through November 29 sold 711,800 metric tons of the grain to overseas buyers, up 89% week to week and 58% from the prior four-week average, according to the USDA.

Egypt, the world’s largest buyer of the grain, purchased 120,000 tons from U.S. suppliers last week, the USDA said.

Wheat for March delivery gained 4¾¢ to $5.31¼ a bushel overnight, and Kansas City futures added 6¼¢ to $5.17½ a bushel.

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2. Ethanol Production Falls to Three-Week Low, as Midwestern Losses Offset Small Gains Elsewhere

Ethanol production in the seven days that ended on December 7 fell to the a three-week low, while inventories also declined, according to the Energy Information Administration.

Output of the biofuel last week declined to 1.046 million barrels a day, on average, down from 1.069 million barrels the previous week and the lowest since November 16, the EIA said in a report.

Production in the U.S. Midwest, easily the biggest-producing region, fell to an average of 963,000 barrels a day from 989,000 barrels. West Coast production averaged 20,000 barrels a day, down from 21,000 the previous week.

The losses in the Midwest and western U.S. more than offset gains on the East Coast, where output rose to 25,000 barrels a day, on average, from 22,000 seven days earlier, and the Gulf Coast where production averaged 24,000 barrels a day, up from 22,000, the government said.

Production in the Rocky Mountain region was, as usual, unchanged at 14,000 barrels a day.

Ethanol stockpiles in the U.S. declined to 22.89 million barrels last week, the EIA said. That’s down from 23.03 million a week earlier and also the lowest level since November 16, according to the Energy Department.

In other news, the USDA will release its Weekly Export Sales Report at 8:30 a.m. in Washington. Analysts are expecting corn sales from 1 million to 1.5 million metric tons, soybean sales from 700,000 to 1 million tons, and wheat sales from 500,000 to 800,000 tons, according to Allendale.

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3. Wind Gusts of Up To 70 mph Expected in Southern Plains on Thursday

Strong winds are expected in the Southern Plains today with gusts of up to 70 mph forecast for parts of the Oklahoma and Texas panhandles, according to the National Weather Service.

“A vigorous storm system will develop over the Southern Plains and deliver several threats on Thursday,” the NWS said in a report early this morning. “Strong winds are expected across the region along with fire weather concerns from southeast New Mexico to south Texas. A marginal risk of severe storms and excessive rain is expected from ArkLaTex to the central Gulf Coast. Even a few inches of snow will be possible in Texas, including just west of Dallas-Fort Worth.”

The excessively strong winds are expected along the Interstate 40 corridor and will be strong enough to blow down small outbuildings or break tree limbs, the agency said. Sudden winds also can cause drivers to lose control, especially in higher-profile vehicles.

Blowing dust and snow also may be a problem in the area today, the NWS said.

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