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3 Big Things Today, January 18

Wheat Futures Higher Overnight; Brazilian Ethanol Producers Push Back on Tariff Proposal.

1. Wheat Futures Rise Overnight After Bouncing Off One-Month Low

Wheat futures were higher in overnight trading as investors who were short the market buy back contracts and close their positions.

The price of the grain dropped to the lowest level in a month, and with the extent of damage from extremely cold weather at the end of December still unknown, many speculators and hedgers don’t want to get too short.

A weaker dollar, which earlier this week fell to the lowest level in three years against a basket of counterparts, also may be underpinning grains as it gives overseas buyers more purchasing power, analysts said.

Corn was little changed after a two-day rally.

Wheat for March delivery rose 1¾¢ to $4.23¼ a bushel overnight on the Chicago Board of Trade. Kansas City futures added 1½¢ to $4.28½ a bushel.

Corn futures fell ½¢ to $3.52½ a bushel overnight

Soybean futures for March delivery lost ¼¢ to $9.68½ a bushel. Soybean meal futures fell 40¢ to $323.90 a short ton, while soy oil rose 0.03¢ to 32.54¢ a pound.


2. Brazil Ethanol Producers Push Back on Proposal to Eliminate Import Tariff

Brazilian ethanol producers are pushing back on a proposal by the country’s government to eliminate a tariff on imports of the biofuel.

Blairo Maggi, Brazil’s minister of agriculture, said he’d ordered a study on the effects of withdrawing the country’s 20% tariff on ethanol imports from the U.S. That sparked some buying in corn futures and was, as expected, well received by American corn and ethanol producers.

Naturally, the Brazilian ethanol industry had the opposite reaction.

Producers in the South American country said eliminating the tariff would increase competition and hurt their domestic industry, according to press reports.

Still, Maggi has said if the results of a technical study show there’d be little impact on prices, he’d put forth a proposal to eliminate or reduce the tariff, the ag ministry said.

The move is strategic, as Brazil wants the U.S. to eliminate its ban on imports of beef from the South American country that was enacted due to inspection issues.

Not coincidentally, Brazil imposed its 20% tax on U.S. ethanol in 2017, the same year the U.S. banned Brazilian beef.


3. Temperatures Warming in Southern Plains in Daytime, Dropping Back Into 20s Overnight

The big thaw is following the big deep freeze starting today as temperatures in the Southern Plains are expected to rise in to the 60s.

The high temperature in Liberal, Kansas, today is forecast at 61˚F. and Amarillo, Texas, will see highs of around 59˚F., according to the National Weather Service.

Still, temperatures will fall back into the low 20s overnight, the NWS said.

The large swings in temperature likely won’t be good for overwintering wheat. The protective snow cover on plants may be reduced or eliminated if temperatures climb too high, leaving wheat unprotected when temperatures fall back overnight.

Melting snow also may turn to ice when temperatures fall below freezing.

Hard-freeze warnings are still in effect along the Gulf Coast, stretching from east Texas all the way to Florida’s Atlantic Coast, according to the NWS.

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