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3 Big Things Today, December 29

Soybeans, Grains Little Changed Overnight; Ethanol Production Jumps to Second-Highest on Record

1. Soybeans, Grains Little Changed on Last Day of Trading Year

It’s the last trading day of the year and soybean and grain futures are, not surprisingly, little changed.

Trading is expected to be extremely quiet today as traders, investors and hedgers take the day off ahead of the long weekend. Some position squaring is expected, but volume will be light, analysts said.

Soybean prices yesterday dropped 11 cents amid favorable weather in Brazil. Rain has already fallen in much of central Brazil and is scheduled to fall in northern states in the next week to 10 days, forecasters said. Crops in the country are in a key reproductive period, which makes the rainfall timely.

Some weekend showers are developing in Argentina, where dry weather has been a concern.

Increased weekly ethanol production numbers are underpinning corn prices, but again, volume is low so it’s uncertain which way prices will turn today.

Soybean futures for March delivery rose 1 cent to $9.57 ¾ a bushel overnight on the Chicago Board of Trade. Soymeal futures added $1 to $317.10 a short ton, and soy oil gained 0.1 cent to 32.81 cents a pound.

Corn for March delivery fell a penny to $3.51 a bushel in Chicago.

Wheat for March delivery declined fell ¾ cent to $4.27 a bushel overnight while Kansas City futures lost ½ cent to $4.26 ¼ a bushel.

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2. Ethanol Production Remains Strong, Rebounds to Second-Highest on Record  

Ethanol production rebounded to the second-highest on record last week, which is good news for corn demand.

Output totaled 1.090 million barrels a day, on average, in the week that ended on Dec. 22, the Energy Information Administration said in a report. That’s up from 1.077 million barrels a week earlier.

Ethanol output has been extremely robust in the past few weeks, rising to the highest weekly average on record in the seven days that ended on Dec. 1, according to the EIA.

Increased production led the U.S. Department of Agriculture to raise its outlook for the amount of corn that will be used to make the biofuel. The USDA said 5.525 billion bushels of the grain would go into ethanol, an increase of 50 million bushels from the prior month’s forecast.  

That increase is welcome news as overseas demand since the start of the marketing year on Sept. 1 have been dismal. Export sales of corn are down 26% versus the same timeframe a year ago, according to the USDA.

Ethanol stockpiles, meanwhile, have dropped to the lowest level since Nov. 17, EIA data show.

Inventories on Dec. 22 totaled 22.031 million barrels, down from 22.320 million a week earlier, marking the third straight weekly decline.

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3. Winter Rolls on as Storm in Iowa, Indiana to Bring Several Inches of Snow

The wintry weather continues with bitter cold and a winter storm in the Midwest and Plains today.

As much as 6 inches of snow are expected to fall in parts of eastern Iowa and western Illinois today, according to the National Weather Service, which issued a winter wheat warning for the region that starts at 11 a.m. and lasts until 10 p.m. local time.

The heaviest snow is expected along the Interstate 80 corridor where snow will fall at a rate of more than an inch an hour, the NWS said.

The storm is more than a localized weather event, however, and actually stretches from extreme eastern South Dakota all the way east into Ohio. The areas around the winter storm warning in Iowa and Illinois will see 3 to 5 inches of snowfall today and into the weekend, the NWS said.

Further north, a wind chill warning is in effect for the entire state of North Dakota and much of Minnesota. Wind chills will reach as low as 50 degrees below zero in some areas, which can cause frost bite and hypothermia in a short amount of time.

In the southern Plains, areas of freezing fog are possible this morning. The advisory is in effect for parts of the Oklahoma panhandle and north and west Texas, but also will affect southwestern Kansas, according to the NWS.

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