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3 Big Things Today, February 25, 2022

Soybeans, Grains Drop Overnight; Ethanol Output Jumps to Three-Week High.

1. Soybean and Grain Futures Plunge Overnight

Soybean and grain prices plunged on profit-taking after wheat contracts hit the highest in nine years yesterday.

Russian forces have moved within a few miles of Kyiv (Kiev), the capital of Ukraine, and western government officials are concerned that the city could fall in a matter of days, according to media reports.

Kyiv has reportedly been hit by missiles as the Russian invasion of Ukraine continues through its second day.

More sanctions were announced yesterday with the U.S. blacklisting several Russian banks and blocking exports on technology, moves designed to limit Russia’s economic ability to conduct global business. Russian oligarchs also have been targeted in a bid to turn the country’s elite against Russian President Vladimir Putin.

Russia is the world’s largest exporter of wheat, while Ukraine is the third-biggest.

Ports are closed in the region as the war rages on.

U.S. troops are being deployed to nearby countries, but the U.S. will not send forces directly to Ukraine, President Joe Biden said in a press conference yesterday.

Still, investors who were long the market, or bet on higher prices, closed soybean, corn, and wheat contracts and booked profits.

Wheat futures hit the highest since 2012 yesterday before moving off their highs. Overnight, the prospect of booking profits won out over further expectations for price increases.

Germany said Russia should be cut off from the SWIFT, or Society for Worldwide Interbank Financial Telecommunication, program that allows banks to communicate with each other and allows for international trade to move efficiently.

Experts have said this is the option of last resort if the announced sanctions have little or no effect.

Soybean futures for May delivery dropped 39¾¢ to $16.14¼ a bushel overnight on the Chicago Board of Trade. Soymeal was down $5.90 to $449.70 a short ton, and soybean oil futures lost 1.84¢ to 70.13¢ a pound.

Corn futures for May delivery fell 21¾¢ to $6.68½ a bushel. 

Wheat for May delivery plunged 29½¢ to $9.05¼ a bushel, while Kansas City futures were down 26½¢ to $9.39½ a bushel.

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2. Ethanol Production Surges to Highest Level in Three Weeks

Ethanol production jumped to a three-week high in the seven days that ended on February 18 while stockpiles were up narrowly, according to the Energy Information Administration.

Output of the biofuel last week averaged 1.024 million barrels a day, the EIA said in a report.

That’s up from 1.009 million barrels a day the previous week and the highest since the week that ended on January 28.

In the Midwest, by far the biggest producing region, production averaged 966,000 barrels a day, up from 949,000 barrels a week earlier, the agency said.

That’s also the highest level in three weeks.

West Coast production was up to 9,000 barrels a day, on average, from 8,000 barrels the previous week, the EIA said.

That was the entirety of the weekly gains as East Coast output was unchanged at 12,000 barrels a day, on average. Rocky Mountain production also was steady week-to-week at 14,000 barrels a day.

Gulf Coast output declined to an average of 22,000 barrels a day from 25,000 barrels the previous week, the government said.

Ethanol stockpiles, meanwhile, rose slightly to 25.507 million barrels in the week through February 18.

That’s up from 25.483 million barrels a week earlier and the highest since the seven days that ended on January 28, the EIA said in its report.

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3. Winter Storms Tapering in Southern Michigan and Northern Indiana

Winter-storm advisories have been issued for the southern half of Michigan and parts of northern Indiana and Ohio, according to the National Weather Service.

Light snow and freezing drizzle are expected to continue until about 8 a.m. local time in the region, the NWS said in a report early this morning.

About 1 inch of snow on top of what’s already fallen is expected, along with an ice glaze, the agency said.

Wind-chill advisories are in effect in much of the Dakotas as values in parts of South Dakota overnight were expected to fall as low as -25˚F.

In eastern North Dakota and parts of northern Minnesota, wind chills likely fell as low as -40˚F., the NWS said.

“The dangerously cold wind chills could cause frostbite on exposed skin in as little as 10 minutes,” the agency said.

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