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3 Big Things Today, July 30, 2020

Soybean Futures Decline Overnight; Ethanol Production Jumps to Four-Month High

1. Soybean Futures Lower in Overnight Trading

Soybeans were lower in overnight trading on lofty crop ratings and favorable weather in parts of the Midwest.

About 72% of the U.S. soybean crop was rated good or excellent as of Sunday, according to the Department of Agriculture. That’s up from 69% a week earlier.

In Iowa and Illinois, the biggest producers of soybeans, 76% of the states’ crops earned top ratings, the USDA said.

Cool weather has settled over eastern Iowa and western Illinois and some showers are expected, according to the National Weather Service. Highs are expected to be in the 80s heading into the weekend and more precipitation is forecast for the area on Sunday.

In Iowa, 68% of the subsoil had adequate or surplus moisture at the start of the week, while in Illinois a whopping 90% of subsoil had adequate or surplus moisture, the USDA said earlier this week.

Soybean futures for December delivery fell 3¢ to $8.82¼ a bushel overnight on the Chicago Board of Trade. Soymeal fell $1.80 to $294 a short ton, and soy oil gained 0.1¢ to 30.16¢ a pound.

Corn futures for December delivery rose ¼¢ to $3.26½ a bushel.

Wheat futures for September delivery dropped 7¢ to $5.25¾ a bushel overnight while Kansas City futures lost 7¼¢ to $4.38½ a bushel.

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2. Ethanol Production Surges to Highest Level in Four Months

Ethanol production jumped to the highest level in more than four months and stockpiles increased last week, according to the Energy Information Administration.

Output of the biofuel increased to an average of 958,000 barrels a day in the week that ended on July 24, the EIA said in a report.

That’s up from 908,000 barrels a week earlier and the highest level since the seven days that ended on March 20.

In the Midwest, by far the biggest producing region, ethanol production surged to an average of 909,000 barrels a day from 860,000 barrels a week earlier, the agency said.

East Coast production increased to 14,000 barrels a day, on average, from 13,000 barrels a week earlier, and Gulf Coast output rose to 17,000 barrels a day from 16,000 the previous week.

Rocky Mountain and West Coast output, meanwhile, each declined by 1,000 barrels to averages of 9,000 barrels a day and 8,000 barrels a day, respectively.

Stockpiles, meanwhile, jumped to 20.272 million barrels last week from 19.801 million barrels, the EIA said in its report.

In company news, Valero Energy, which operates 14 ethanol plants with a capacity of 1.73 billion gallons a year, said this morning that revenue in the third quarter dropped to $10.4 billion from $28.9 billion a year earlier.

Of that, Valero’s ethanol business generated $581 million in revenue.

The company said its ethanol segment reported an adjusted operating loss of $20 million. Production in the three months that ended on June 30 came in at an average of 2.3 million gallons per day, about half what it was in the same quarter last year.

“The decrease in adjusted operating income was attributed primarily to lower margins resulting from lower ethanol prices and lower throughput,” Valero said in a statement this morning.

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3. Flood Warnings, Watches in Effect For Parts of Several Midwestern States

Flood warnings and flash flood watches are in effect in parts of southern Nebraska and northern Kansas this morning after heavy rain fell in the area yesterday.

The excessive rainfall led to isolated flooding in several counties in the area. A flood warning is in effect until late Thursday evening in some counties in the region, the NWS said in a report.

Thunderstorms and showers will persist in the area until diminishing tonight. Up to 2 more inches of rain will fall in the area today, the agency said.

“Rainfall of this magnitude falling on saturated ground from heavy rainfall in recent days may lead to flash flooding and rises on creeks and rivers,” the NWS said.

Flood watches and advisories also are in effect for much of southern Missouri and Illinois.

Numerous scattered thunderstorms may produce heavy rain in a short amount of time, the agency said. About 1.5 to 2.5 inches of rain are expected, though some areas may see up to 5 inches of precipitation through this evening, the NWS said.

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