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3 Big Things Today, May 17

Wheat Futures Jump Overnight; Ethanol Production Reaches Highest Since February

1. Wheat Futures Jump as Global Weather Woes Continue

Wheat futures jumped in overnight trading amid ongoing weather woes globally.

Much of the U.S. southern Plains is suffering from either an extreme or exceptional drought, the worst possible ratings, according to the U.S. Drought Monitor.

Storms are rolling through the region with large hail and winds of up to 65 mph expected. Rain may accompany the storm, according to the National Weather Service. Some areas may flood, but a large drink of water would benefit winter wheat plants in the region.  

In Australia, extremely dry weather for a second straight year has producers worried, though the crop is just getting started so there’s time for improvement, analysts said. If rain doesn’t fall, however, the country’s crop will again be exceptionally small.

Wheat for July delivery rose 10¼¢ to $5.04½ a bushel overnight on the Chicago Board of Trade while Kansas City futures added 11¾¢ to $5.25¾ a bushel.

Corn futures gained 2¼¢ to $4.01½ a bushel overnight.

Soybean futures for July delivery gained 6¼¢ to $10.06 a bushel. Soymeal futures added $3 to $379.60 a short ton and soy oil rose 0.23¢ to 30.82¢ a pound.

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2. Ethanol Production Rises to Highest Level Since February, Stocks Decline                                   

Ethanol production jumped to the highest level in almost three months while stockpiles declined last week, according to the Energy Information Administration.

Output of the biofuel in the week that ended on May 11 totaled 1.058 million barrels a day, on average, the EIA said in a report. That’s up from 1.04 million barrels a week earlier and the highest since February 16.

Inventories, meanwhile, fell to 21.505 million barrels last week from 21.964 million seven days earlier, according to the government.

That’s the lowest level for stocks since April 13.

Ethanol has been a political point of contention in recent weeks as lawmakers try to hammer out a deal between the industry and big oil.

Last week, the White House said there was an agreement in place in which E85 blends would be available year-round – that wasn’t controversial – but also said a deal had been struck to allow oil refineries to count exports as part of their commitment to the Renewable Fuels Standard.

The ethanol industry said such a move would be disastrous while some legislators said no deal had actually been made.

In the latest dustup, Senator Charles Grassley of Iowa said he would ask Environmental Protection Agency Administrator Scott Pruitt to resign if he doesn’t stop giving out RFS waivers to refiners. More than two dozen refiners have been given the waivers, saying they’re suffering economic hardship.

In other news, the U.S. Department will release its weekly export sales report this morning. Analysts are expecting old-crop corn sales from 700,000 to 1 million metric tons, soybean sales from 300,000 to 600,000 tons, and wheat sales from 0 to 200,000 tons, according to Allendale.

New-crop corn sales are pegged from 50,000 to 200,000 metric tons, soybean sales are seen from 100,000 to 400,000 tons, and 2018-2019 wheat sales are forecast from 100,000 to 300,000 tons, the firm said.

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3. Thunderstorms Forecast in Southern Plains May Bring Hail, Rainfall

Thunderstorms are expected across much of the southern Plains including southwestern Kansas and the Oklahoma and Texas panhandles, according to the National Weather Service.

“Some storms that develop will have the potential to become strong to severe, especially this afternoon and evening,” the NWS said in a report early Thursday morning. “The main threats will be hail up to the size of golf balls and winds up to around 65 mph. Heavy rains can also be expected with the stronger storms, possibly leading to localized flooding or flash flooding.”

The storms likely will continue through the weekend across the panhandles with some becoming severe, the agency said.

Despite the storms, “elevated fire weather conditions” are expected in far western counties in the panhandles due to extremely low humidity, high temperatures, and strong winds.

Farther north, flooding continues along the Mississippi River in Iowa. Another round of thunderstorms is possible this weekend, which would further exacerbate the flooding, the NWS said.

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