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3 Big Things Today, June 15, 2022

Soybeans, Grains Fall Overnight; Drivers Hit the Road Despite High Gas Prices.

1. Soybean and Grain Futures Lower Overnight

Soybean and grain futures were lower in overnight trading as investors take a risk-off approach amid global inflation concerns.

Equity markets sold off yesterday with the S&P 500 dropping to the lowest this year before rebounding narrowly in the overnight session on the same concerns about continued demand that's fueling inflation worldwide.

The U.S. Federal Reserve is expected today to again raise its key interest rate in a bid to cool the economy and slow red-hot inflation. How much the federal funds rate will rise is a bit uncertain, though traders seemed to have priced in a 75-basis-point bump for this month and are already looking ahead to a similar increase in July.

On the weather front, extremely hot weather is hovering over most of Illinois, Indiana and Ohio this week with temperatures forecast to hit as high as 110 degrees Fahrenheit in some areas, according to data from the National Weather Service.

Some rain in the northwestern Corn Belt may improve moisture but hot, dry weather is expected to cause stress on recently emerged plants in much of the Midwest, said Donald Keeney, an agricultural meteorologist with Maxar.

Dry weather also is prevailing in much of the Delta this week. A few showers may fall in southeastern parts of the region later this week but rains will be limited and temperatures will be warm, Keeney said.

Soybeans for July delivery dropped 4 3/4¢ to $16.93 3/4 a bushel overnight on the Chicago Board of Trade.

Corn futures declined 2 3/4¢ to $7.65 1/2 a bushel.

Wheat futures for July delivery fell 2 3/4¢ to $10.47 1/2 a bushel, while Kansas City futures lost 6 3/4¢ to $11.35 ½ a bushel.

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2. Record Gasoline Prices Not Deterring Drivers, AAA Says

Record gas prices haven't reduced demand as the summer driving season wears on in the U.S., according to data from the American Automobile Association, better known as AAA.

Regular gas prices on Tuesday rose to a record $5.016-per-gallon average nationally, the automotive services company said. That's up from $4.47 a gallon a month ago. Premium gas prices yesterday were at $5.693 a gallon, up from $5.116 a gallon last month, AAA said.

Diesel prices on Tuesday were at $5.775 a gallon versus $5.568 a month ago. Drivers buying E85, meanwhile, paid $4.337 a gallon at the pump yesterday versus $3.849 a month earlier, the company said in a report.

Despite the lofty prices, travelers are still hitting the roads.

"Based on the demand we're seeing, it seems high prices have not really deterred drivers," said Andrew Gross, a spokesman for AAA. "If prices stay at or above $5, we may see people start to change their daily driving habits or lifestyle, but it hasn't happened yet."

Domestic gas inventories fell by 800,000 barrels to 218.2 million barrels last week while demand grew by 220,000 barrels to 9.2 million, according to data from the Energy Information Administration.

Reduced supply combined with increased demand is contributing and will continue to contribute to higher prices as the summer season wears on, AAA said.

While the company attributed the increase to rising oil prices, crude futures are actually down in recent days.

U.S. oil futures are down almost 4% in the past week to $117.51 a barrel as of this morning. The price on June 8 hit $122.11 a barrel, the highest since March 8, before falling back in the past seven days.

Still, gas prices paid by consumers at the pump continue to rise.

California is the most expensive market in the U.S. at $6.43 a gallon, followed by Nevada at $5.65 and Alaska at $5.56 a gallon, AAA said.

Most Corn Belt states including the Dakotas, Minnesota, Nebraska, and Iowa are paying from $4.70 to $4.88 a gallon, the company said. Illinois drivers are paying $5.56 a gallon, on average, and consumers in Indiana are paying $5.05 a gallon.

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3. Heat Warnings, Advisories Continue in Eastern Midwest

Heat warnings and advisories continue in much of the eastern Corn Belt today, according to the National Weather Service.

In eastern Iowa and much of Illinois, heat index values are expected to reach 105 degrees this afternoon.

Those working outside today are advised to exercise extreme caution due to the heat wave, the NWS said in a report early this morning.

In northern Indiana and southern Michigan, index values may top 110 degrees today, the agency said.

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

In the southern Plains, meanwhile, it's going to be hot and mostly dry for producers harvesting their hard-red winter wheat. Temperatures will top out near the triple digits and only a small chance of rain is in the forecast, the agency said.

About 53% of the Texas was harvested as of Sunday and 32% of Oklahoma wheat was in the bin, according to data from the USDA.

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