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3 Big Things Today, July 22, 2021

Wheat Futures Plunge Overnight; Ethanol Production Falls to Five-Week Low.

1. Wheat Futures Plunge in Overnight Trading

Wheat futures fell in overnight trading, heading for their first loss in seven sessions, amid profit-taking after prices hit the highest level in two months.

Prices yesterday rose by double digits in Chicago and have been moving higher amid concerns about the spring-wheat crop in the U.S. Northern Plains and the Canadian Prairies.

Extremely dry weather has plagued the area this growing season.

Little or no rain has fallen in much of North Dakota, the biggest grower of spring varieties, or parts of northern South Dakota and central Minnesota in the past week, National Weather Service data show.

Only 11% of the spring-wheat crop was in good or excellent condition as of Sunday, down from 16% a week earlier, the U.S. Department of Agriculture said in a report this week. At this time last year, 68% of the crop had received top ratings, according to the government.

It seems, for now at least, investors are seeing an opportunity to liquidate positions and book profits.

Corn and soybeans also plunged in overnight trading on profit-taking and technical selling.

Parts of Nebraska and western Iowa have been dry in the past week, but much of the Corn Belt has had ample rainfall. As much as six times the normal amount of precipitation fell in eastern Iowa, southern Wisconsin, and parts of Missouri, Illinois, and Indiana in the past week, NWS maps show.

Wheat futures for September delivery dropped 16¼¢ to $6.94½ a bushel overnight on the Chicago Board of Trade, while Kansas City futures lost 11¢ to $6.57¾ a bushel.

Corn futures for May delivery fell 12¾¢ to $5.55¾ a bushel.

Soybean futures for November delivery plunged 21¢ to $13.68¾ a bushel. Soymeal dropped $4.30 to $369.70 a short ton, and soy oil lost 1.16¢ to 61.62¢ a pound.

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2. Ethanol Production Drops to Five-Week Low

Ethanol output in the seven days that ended on July 16 dropped to the lowest level in five weeks while inventories rebounded.

Production of the biofuel dropped to an average of 1.028 million barrels a day last week, the Energy Information Administration said in a report.

That’s down from 1.041 million barrels a day, on average, the previous week and the lowest since the seven days that ended on June 11, according to the EIA.

In the Midwest, by far the biggest producing region, output averaged 980,000 barrels a day, also a five-week low.

That accounted for the entirety of the losses for the week as production in the Gulf Coast actually rose to an average of 18,000 barrels a day last week from 17,000 barrels, the agency said.

East Coast output was unchanged at 12,000 barrels a day, Rocky Mountain production was on par week-to-week at 10,000 barrels a day, and West Coast production stayed at 9,000 barrels a day, the EIA said.

Ethanol stockpiles on July 16, meanwhile, jumped to the highest level in almost five months.

Inventories surged to 22.518 million barrels last week, up from 21.134 million in the previous seven-day period and the highest since the week that ended on Feb. 19, the EIA said in its report.

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3. Thunderstorms Possible in Parts of U.S. Northern Plains

Thunderstorms are possible in parts of the Northern Plains today, with some potentially turning severe, according to the National Weather Service.

Damaging winds late this afternoon into tonight are the main concern with wind gusts of up to 60 mph expected, the NWS said in a report early this morning.

The storms likely will continue into tomorrow in western North Dakota where golf ball-size hail is forecast along with winds of up to 70 mph.

Next door in Montana, meanwhile, the hot and dry weather continues.

Excessive heat is again expected with temperatures reaching as high as 101°F., the agency said.

“Extreme heat will significantly increase the potential for heat-related illnesses, particularly for those working or participating in outdoor activities,” the NWS said.

In eastern Iowa and northern Illinois, meanwhile, storms are possible this afternoon and early evening before giving way to hot and humid conditions for the weekend.

Heat indexes will be into the triple digits for several days in a row in some locations, the agency said. Some isolated storms are possible over the next few days, but no severe weather is expected.

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