3 Big Things Today, June 1

Soybean Futures Rise Overnight; Ethanol Stockpiles Fall to Seven-Month Low.

1. Soybeans Rise Overnight as China Reportedly Buys U.S. Supplies

Soybeans were higher in overnight trading after China’s state grain-buying agency purchased supplies from the U.S.

COFCO, as the group is known, purchased an unspecified number of soybean cargoes, Reuters reported, citing sources familiar with the transactions. Still, gains were tempered as the report also said future purchases by the Asian country may be limited due to renewed trade tensions.

Tensions have again heated up not only for China but also for several other buyers of U.S. agricultural products. President Trump on Thursday announced resumption of tariffs on steel and aluminum from Canada, Mexico, and the European Union.

All three have said they’ll retaliate by adding tariffs on U.S. products, in some cases agricultural goods.

Soybean futures for July delivery rose 4½¢ to $10.23 a bushel overnight on the Chicago Board of Trade. Soy meal added 20¢ to $375.50 a short ton, and soy oil gained 0.10¢ to 31.22¢ a pound.

Corn futures gained 1¢ to $3.95 a bushel overnight.

Wheat for July delivery fell 6¼¢ to $5.20 a bushel overnight, while Kansas City futures lost 5½¢ to $5.37 a bushel.

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2. Ethanol Production Rises Week-to-Week, Inventories Drop to Seven-Month Low                    

Ethanol production jumped week to week, while stockpiles fell to the lowest since October.

Output in the seven days that ended on May 25 totaled 1.041 million barrels a day, on average, the Energy Information Administration said in a report. That’s up from 1.028 million a day a week earlier, according to the EIA. Production rose by 15,000 barrels a day in the Midwest, from where the bulk of output comes.

Stockpiles dropped to 21.263 million barrels as of May 25, a seven-month low, from 22.129 million a week earlier, according to the government.

A dispute is still stewing between large ethanol companies and big oil as it’s still unclear whether crude refiners will be able to count exports toward their requirements under the Renewable Fuels Standard.

In other news, the USDA’s Weekly Export SalesReport is due today, a day later than usual due to the Memorial Day holiday on Monday.

Old-crop corn sales are pegged from 700,000 to 1 million metric tons, with new-crop sales from 150,000 to 350,000. Soybean sales for 2017-2018 are seen at 300,000 to 600,000 tons, while 2018-2019 sales are expected from 350,000 to 750,000, Allendale said.  

Wheat sales for the marketing year that just ended are forecast from -100,000 to +100,000 tons, while new-crop sales are pegged from 150,000 to 450,000, according to the researcher.

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3. Hot, Dry Weather Leads to Heat, Wildfire Warnings in Texas, Oklahoma, Kansas

Hot, dry weather is dominating the southern U.S. landscape today with heat advisories and red-flag warnings in effect for Texas, Oklahoma, and Kansas.

Heat advisories are in effect for much of West Texas, while red-flag warnings due to extremely dry weather are in place in the Texas panhandle, the National Weather Service said in a report early Friday morning.

In the panhandle, winds are expected to gust up to 35 mph and relative humidity is expected below 6% – an extremely low figure. Combined with high temperatures topping 100˚F. today, conditions are ripe for wildfires.

A heat advisory is in effect in southern Kansas and central Oklahoma, as heat indexes are expected to reach as high as 108˚F., the NWS said. Working outside is not advised.

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