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3 Big Things Today, December 2, 2021

Wheat Surges in Overnight Trading; Ethanol Output Lowest in Seven Weeks.

1. Wheat Surges Overnight on Global Concerns

Wheat futures jumped in overnight trading as extreme drought creeps into southwestern Kansas amid ongoing concerns about global supplies.

A small portion of southwestern Kansas is now facing extreme drought conditions, while a larger portion is seeing severe drought, according to the U.S. Drought Monitor.

Only 0.6% of the state is experiencing extreme drought, the second-worst rating on the monitor’s scale, but that’s up from 0.0% the previous week and three months earlier.

About 6.1% of the state is facing severe drought conditions, up from 4.4% a week earlier and 0.8% three months ago, the Drought Monitor said.

Egypt, the biggest importer of the grain, bought 600,000 metric tons of wheat from international supplies for delivery in January, according to the country’s General Authority for Supply Commodities (GASC).

The purchase comes as Russian wheat prices continue to rise and the country imposes export duties on shipments to ensure domestic supply.

Russian wheat exports fell 17% from July 1 to Nov. 25 from the same time frame a year earlier, S&P Global said in a report this week.

Still, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said Monday that it now expects a record wheat crop. The forecast comes despite excessive rainfall in the country that may lead to losses and quality issues.

Researcher Gro Intelligence said in a report that it believes the outlook for a record crop is misguided.

Production will fall “sharply” from last year and come in below ABARES estimates, Gro said in a report.

“Cooler-than-normal temperatures in eastern Australia have reduced wheat yield prospects, according to Gro’s model,” the firm said. “Heavy rains in the region could further compromise crop quality and production.”

Wheat futures for December delivery jumped 14½¢ to $8.05 a bushel overnight on the Chicago Board of Trade, while Kansas City futures added 15¢ to $8.34¼ a bushel.

Corn futures for December delivery were up 6¢ to $5.77½ a bushel.

Soybean futures for November delivery added 5¾¢ to $12.34 a bushel. Soymeal rose $2.10 to $351.20 a short ton, while soy oil gained 0.53¢ to 55.71¢ a pound.

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2. Ethanol Production Drops to Seven-Week Low

Ethanol output plunged to the lowest level in seven weeks while inventories climbed last week, according to the Energy Information Administration.

Production of the biofuel in the seven days that ended on Nov. 26 average 1.035 million barrels a day, the EIA said in a report.

That’s down from 1.079 million barrels a week earlier and the lowest level since Oct. 8.

In the Midwest, by far the biggest producing region, output plunged to an average of 978,000 barrels a day, down from 1.024 million the previous week and the lowest since Oct. 8, government data show.

Production on the West Coast dropped to an average of 7,000 barrels a day from 10,000 barrels, the EIA said.

That was the entirety of the decliners for the week, however.

East Coast output was unchanged at 12,000 barrels a days and Rocky Mountain production remained at 11,000 barrels a day for the fourth straight week.

Gulf Coast production was the lone riser for the week, jumping to an average of 27,000 barrels a day. That’s up from 22,000 barrels a day and the largest level since Oct. 25, 2018, the agency said.

Stockpiles, meanwhile, jumped to 20.301 million barrels in the week through Nov. 26 from 20.164 million a week earlier.

Last week’s level marked the highest since the week that ended on Sept. 3, the EIA said in its report.

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3. Southern Plains Likely to See Elevated Fire Risk Today

Parts of the Southern Plains are facing elevated fire risk today due to low humidity and gusty winds, according to the National Weather Service.

Wind speeds are expected to be sustained from 5 to 15 mph with stronger gusts today in parts of southwestern Kansas and the Oklahoma and Texas panhandles, the NWS said in a report early this morning.  

Relative humidity will be in the teens, creating very dry conditions, the agency said.

Farther north in west-central Nebraska, record-breaking warmth is forecast for today along with dry air and winds, all of which will create tinderbox-like conditions.

Temperatures will be near records in the upper 70s (°F.) today. Winds and low humidity will lead to increased fire risk, the NWS said.

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