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3 Big Things Today, January 27, 2022

Soybean Futures Higher Overnight; Weekly Ethanol Production Falls

1. Soybean Futures Higher in Overnight Trading

Soybean futures rose in overnight trading as rival palm oil prices hit a record.

Malaysian palm oil prices hit an intraday record high before backing off into the close after Indonesia, the world's largest producer and shipper, said producers must sell a fifth of what they'd planned to ship overseas into the domestic market.

The goal of Indonesia's Domestic Market Obligation policy is to ensure ample domestic supply, government officials said.

Palm oil competes directly with soybean oil as a cooking oil on the international market.

Investors also are keeping an eye on the weather in South America, where dry weather had been persistent in growing areas of Brazil and Argentina.

Recent rains have slightly eased concerns, and more precipitation is on the way.

Rainfall is forecast in several states including Mato Grosso, Goias, Parana and Rio Grande do Sul in Brazil, said Donald Keeney, an agricultural meteorologist with Maxar.

Precipitation also is expected in growing regions of Argentina.

"Additional rains across northern areas over the next two days should further improve moisture," Keeney said.

Soybean futures for March delivery rose 7 3/4¢ to $14.47 ¾ a bushel overnight on the Chicago Board of Trade. Soymeal was up $1 to $401.50 a short ton and soybean oil futures jumped 0.83¢ to 64.76¢ a pound.

Corn futures for March delivery fell 3/4¢ to $6.26 ¼ a bushel.

Wheat for March delivery lost 2¢ to $7.93 a bushel, while Kansas City futures dropped 2 1/4¢ to $8.13 ½ a bushel.

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2. Ethanol Production Falls, Inventories Rise to 20-Month High

Ethanol output dropped in the seven days that ended on Jan. 21 while stockpiles increased to the highest in 20 months, according to the U.S. Energy Information Administration.

Production of the biofuel fell to an average of 1.035 million barrels a day from 1.053 million a week earlier, the EIA said in a report.

In the Midwest, by far the biggest producing region, output declined to an average of 979,000 barrels a day from 994,000 barrels the previous week.

East Coast output fell to 10,000 barrels a day, on average, from 11,000 barrels a week earlier, the agency said. Gulf Coast production dropped to an average of 21,000 barrels a day from 25,000 barrels.

West Coast production was unchanged at 9,000 barrels a day.

Rocky Mountain producers increased output last week to an average of 15,000 barrels a day. That's up from 14,000 barrels the previous week.

Ethanol stockpiles were up week-to-week.

Inventories as of Jan. 21 stood at 24.476 million barrels, up from 23.592 million a week earlier, marking the highest level since May 1, 2020, the EIA said in its report.


3. Winter Weather Continues in Northern Plains

A winter-weather advisory is in effect for eastern North Dakota and western Minnesota this morning as snow and wind continues throughout the morning, according to the National Weather Service.

"Near-blizzard conditions expected at times, especially in open country with falling snow," the NWS said in a report early this morning.

Winds are forecast as strong as 40 miles per hour. Blowing snow will reduce visibility throughout the day into tomorrow morning, the agency said.

In northern Iowa, meanwhile, wind chills are expected to drop as low as 30 degrees below zero.

Values that low could cause frostbite in as little as 30 minutes, the NWS said.

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