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3 Big Things Today, June 7

Wheat Futures Surge Overnight; Ethanol Stockpiles Rise Slightly Week to Week.

1. Wheat Futures Jump Overnight on Global Concerns, Short Covering

Wheat futures jumped on worries about weather in Russia and Australia and as investors who were short the market, or had bet on lower prices, scramble to exit their positions and cover their losses.

In Russia, it’s too wet in some areas but too dry in others. In parts of western Russia, light rain and cool weather are expected to slow crop development, World Weather Inc. said, according to Allendale. Showers that may fall in Ukraine will fail to move into southern Russia, increasing stress on already dry plants, Commodity Weather Group said in a report.

In Australia, meanwhile, showers will benefit northwestern wheat-growing regions but will still miss the southwest, slowing growth in a third of the country’s Wheat Belt, CWG said.

On a technical basis, investors who had bet on lower wheat futures have been buying back contracts the past two sessions, scrambling to exit their short positions, analysts said. That, along with a weaker dollar today, is giving prices a boost.

Wheat for July delivery jumped 12¢ to $5.31¾ a bushel overnight on the Chicago Board of Trade, while Kansas City futures added 10¾¢ to $5.50½ a bushel.

Corn futures rose 2¢ to $3.80¼ a bushel overnight.

Soybean futures for July delivery rose ½¢ to $9.94¾ a bushel in Chicago. Soy meal fell 50¢ to $364.50 a short ton, and soy oil gained 0.04¢ to 30.69¢ a pound.

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2. Ethanol Stockpiles Slightly Higher Last Week, Production Unchanged                                           

Ethanol stockpiles rose slightly week to week, while production was unchanged, according to the Energy Information Administration.

Inventories of the biofuel rose to 21.897 million barrels as of June 1, up from 21.263 seven days earlier, the government said in a report. The total is little changed from 21.982 million during the same week in 2017.

Production in the seven days through June 1 averaged 1.041 million barrels a day, unchanged from the prior week, the EIA said. That’s up from average output of 999,000 barrels a day for the week a year earlier, according to the agency.

Ethanol has been a political lightning rod lately, and President Trump rejected a deal between ethanol producers and oil refiners that would’ve allowed E85 to be sold year-round but also would’ve let refiners count exports toward their requirements under the Renewable Fuels Standard.

Doing so would curb ethanol use and decrease the amount of corn used to make the biofuel, analysts and lawmakers said. Rejecting the proposal drew praise from farm-state legislators and the ire of the oil refiners’ union.

In other news, the USDA is scheduled to release its Weekly Export Sales Report at 7:30 a.m. in Washington. Analysts have pegged old-crop corn sales from 600,000 to 900,000 metric tons and 2017-2018 soybean sales from 50,000 to 350,000. New-crop soybean sales are pegged from 0 to 100,000 tons, while wheat sales for delivery in the marketing year that started on June 1 are seen from 250,000 to 450,000 tons, according to Allendale.

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3. Severe Thunderstorms Forecast For Much of Central Plains Through Saturday

Severe thunderstorms are possible from the front range of the Rockies into the Central Plains the next couple of days, according to the National Weather Service.

“Damaging winds and large hail will be common, especially this afternoon and evening for parts of Iowa, Kansas, Nebraska, and Wyoming,” the NWS said in a report early Thursday morning. “Meanwhile, summer heat can be anticipated across the southern tier of the U.S.”

In central Nebraska and Kansas, wind gusts of up to 50 mph are the primary concern with the storm, the agency said.

Wind speeds will increase this evening as the storm rolls through the area, potentially picking up to 70 mph. Large hail is also a concern, according to the NWS. The storms will stick around through Saturday in some areas.

In the Southern Plains, the outlook for the next month isn’t good for wheat producers hoping for cooler, wetter weather to finish out their crop. The National Weather Service said it expects above-normal temperatures throughout June after May temperatures were 8˚ above normal, on average.

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