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3 Big Things Today, December 7

Soybeans Lower in Overnight Trading; Ethanol Production Hits Another Record.

1. Soybeans Lower on Stronger Dollar, Speculation Rally Was Overdone

Soybeans were lower overnight on a stronger dollar, and as some investors suspect, the recent rally above $10 a bushel was a bit overdone.

Prices until yesterday’s sessions had risen above $10 a bushel on speculation that dry weather in Argentina would curb production. While that’s still a very real threat, forecasters said, the run-up in prices may have been overdone, analysts said.

The dollar’s rise since December 1 also may be capping prices as a stronger greenback makes U.S. products less attractive to overseas buyers. The dollar has risen steadily since the start of the month and is up another 0.1% overnight.

Demand for U.S. crops so far this marketing year has been fairly dismal. Total commitments from overseas buyers to purchase corn since September 1 are down 27% from the same time frame last year, and promises to buy soybeans are down 18%, according to the USDA.

Soybean futures for January delivery dropped 7¼¢ to $9.95½ a bushel overnight on the Chicago Board of Trade. Soy meal fell $4.50 to $337.80 a short ton, and soy oil lost 0.19¢ to 32.98¢ a pound.

Corn futures for March delivery fell ¾¢ to $3.52 a bushel in Chicago.

Chicago wheat for March delivery was unchanged at $4.25¼ a bushel overnight, and Kansas City futures added 1¼¢ to $4.24¾ a bushel.

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2. Ethanol Production Rises to Second Record in Three Weeks; Export Sales Due Today

Ethanol production rose to a record for the second time in three weeks, and stockpiles increased to the highest level since May.

Output in the week that ended on December 1 totaled 1.108 million barrels a day, up from 1.066 million barrels the prior week and above the prior record of 1.074 million set in the seven days that ended on November 17, the Energy Information Administration said in a report.

The year-to-date pace for ethanol output is up 4.1% from last year, Allendale noted. The news is important as it may lead the USDA to increase its estimate on how much corn will be used to produce ethanol in the current marketing year, the researcher said.

In other news, the weekly Export Sales Report is due out this morning with analysts expected corn sales from 800,000 to 1.3 million metric tons, soybean sales of 1 million to 1.65 million, and wheat sales from 250,000 to 450,000 tons.

Finally, Statistics Canada in a report yesterday pegged its wheat crop a shade under 30 million metric tons, topping expectations for 28 million tons but still below last year’s total of 31.7 million tons.

Soybean output was seen at 7.72 million tons, topping the year-ago level of 6.55 million, and corn production this year will rise to 14.1 million tons from 13.2 million last year, the agency said.

Canola output was forecast at 21.3 million tons, beating expectations for 20.2 million tons and last year’s 19.6 million, StatsCan said.

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3. Cold Snap Hits Southern Plains This Morning, Winter Weather Advisory Issued in Michigan

A cold snap is hitting the Southern Plains early this morning as some areas along the Interstate 70 corridor are seeing temperatures below freezing for several hours this morning.

The below-zero temperatures are expected to rise shortly after sunrise, the National Weather Service said. Still, exposed winter wheat plants – those without a protective layer of snow – may be at risk of winterkill in some areas.

Westerly winds are expected to pick up again this afternoon, which combined with dry weather will create hazardous wildfire conditions, the NWS said.

Farther east, a winter weather advisory is in effect for much of western Michigan along the Lake Michigan shoreline. As much as 2 to 4 inches of snow are expected to fall in the region through this afternoon, according to the agency.

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