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3 Big Things Today, July 1, 2021

Corn, Soybeans Surge Overnight; Ethanol Production Jumps to Three-Week High

1. Corn and Soybean Futures Jump in Overnight Trading

Corn and soybeans surged in overnight trading as investors continue to digest yesterday’s acreage and grain stocks reports from the U.S. Department of Agriculture.

The USDA pegged corn plantings at 92.7 million acres, below expectations by analysts polled by Reuters who expected a forecast for 93.8 million acres. If realized that would be a 2% increase year-over-year.

Soybean area is projected at 87.6 million, missing analysts’ expectations for roughly 89 million acres.

Also bullish for agriculture commodities was the USDA’s grain stocks report.

Corn stockpiles in the U.S. on June 1 totaled 4.11 billion bushels, an 18% year-on-year decline and the lowest in seven years. Analysts were expecting stocks of 4.14 billion bushels.

Soybean inventories were reported at 767 million bushels, a 44% drop from last year and the lowest level since June 1, 2015. That was well below expectations from the analysts polled by Reuters for 787 million bushels.

Wheat stocks at the beginning of June stood at 844 million bushels, a six-year low and down 18% from the same point in 2020, the USDA said. The trade expectation was for 859 million bushels.

Extreme weather also may be boosting prices. Flooding is ongoing in several parts of the country this morning including the southern Plains and much of Missouri.

In the northern Plains, extremely hot weather is expected today. Temperatures in in parts of eastern Montana are expected to reach up to 102 degrees Fahrenheit, the National Weather Service said.

Combined with strong winds of up to 20 miles an hour and gusts topping 30 miles an hour, conditions are ripe for wildfires.

Corn futures for December delivery jumped 13 3/4¢ to $6.02 1/4 a bushel overnight on the Chicago Board of Trade.

Soybean futures for November delivery rose 10¢ to $14.09 a bushel. Soymeal gained $2.90 to $384.60 a short ton, while soy oil added 1.12¢ to 63.88¢ a pound.

Wheat futures for July delivery added 1/4¢ to $6.79 ¾ a bushel, while Kansas City futures fell 2 1/2¢ to $6.56 ½ a bushel.

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2. Ethanol Production Rises to Three-Week High, Stockpiles Surge

Ethanol output in the seven days that ended on June 25 rose to the highest in three weeks while inventories surged, according to the Energy Information Administration.

Production of the corn-based biofuel increased to an average of 1.058 million barrels a day, the EIA said in a report.

That’s up from 1.048 million barrels a day the previous week and the highest level since the seven days that ended on June 4.

In the Midwest, by far the biggest producing region, output averaged 1.013 million barrels, up from 1.002 million barrels the previous week, the agency said. That’s also a three-week high.

East Coast production rose to an average of 11,000 barrels a day from 10,000 barrels the previous week, the EIA said.

That was the entirety of the weekly gains. Gulf Coast output was unchanged at 16,000 barrels a day.

Rocky Mountain production decreased to an average of 9,000 barrels a day from 10,000 barrels a week earlier, the government said.

West Coast output declined to 8,000 barrels a day, on average, from 9,000 barrels the previous week.

Stockpiles, meanwhile, jumped to the highest level in more than three months.

Inventories through June 25 stood at 21.572 million barrels, up from 21.12 million a week earlier and the highest since the seven days that ended on March 19, the EIA said in its report.

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3. Flooding Ongoing in Parts of Kansas and Missouri Thursday

Flood warnings are still in effect for parts of eastern Kansas and much of central Missouri this morning as several waterways continue to overrun their banks, according to the National Weather Service.

Flash flood watches, flood advisories and dense-fog advisories also have been issued in the region.

“A very moist air mass with a slow-moving weak front over the area will continue to have the potential to produce clusters of heavy rain producing showers and thunderstorms with localized rainfall rates of two inches per hour or more possible,” the NWS said in a report early this morning. “Localized flash flooding will be possible. Watch for flash flooding in areas where heavy rain has occurred or has occurred upstream from your location.”

In the Texas and Oklahoma panhandles, where hard-red winter wheat is being harvested, a flood watch is in effect.

Wet air, slow movement of storms and recent rainfall may lead to flooding in some parts of the area tonight and tomorrow, the agency said.

Storms are forecast for this evening into Friday afternoon.

“With recent heavy rainfall, additional heavy rain will likely cause flooding,” the NWS said.

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