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3 Big Things Today, May 24

Soybeans, Grains Higher Overnight; Ethanol Production Drops, Stockpiles Rise.

1. Soybean Futures Higher on Reports China Resumes Buying

Soybeans were higher as China resumes purchases from U.S. supplies, while grains were higher on adverse weather.

A Chinese importer reportedly purchased a cargo for shipment in August, the first sale to the Asian nation, generally the biggest buyer of beans from the U.S., in several weeks, according to Reuters. The U.S. and China have been involved in a trade spat, but tensions have eased in recent days.  

Corn prices were higher overnight as wet weather in the northern Midwest threatens planting. While 81% of the total U.S. crop is in the ground, on par with the five-year average, growers are behind in the Dakotas, Minnesota, and Wisconsin, according to the USDA.

Some investors are concerned that planting delays will mean a shift out of corn and into other crops including soybeans.

For wheat, dry weather in parts of several producing countries is giving prices a boost.

Soybean futures for July delivery rose 10¾¢ to $10.50 a bushel overnight on the Chicago Board of Trade. Soy meal futures gained $5.20 to $385.90 a short ton, and soy oil added 0.27¢ to 31.97¢ a pound.

Corn futures added 3¼¢ to $4.11¾ a bushel overnight.

Wheat for July delivery gained 10¼¢ to $5.41¼ a bushel in Chicago, while Kansas City futures rose 9¼¢ to $5.61 a bushel.


2. Ethanol Production Declines Week to Week, Inventories Rise                                                          

Ethanol production tumbled week to week, while inventories of the biofuel increased.

Output totaled 1.028 million barrels a day, on average, in the week that ended on May 18, the Energy Information Administration said in a report. That’s down from 1.058 million barrels the prior week and the lowest level since April 20.

Inventories, meanwhile, increased to 22.129 million barrels, the EIA said. The total is up from 21.505 million barrels a week earlier and the highest in three weeks, according to the agency.

Ethanol has been a political hot spot in recent weeks as the battle between big ethanol and big oil continues. Marathon Oil reportedly asked for a “hardship waiver” that allows it to forego or partially forego its commitment to the Renewable Fuels Standard.

Senator Charles Grassley of Iowa said this week that if the company, the biggest oil refiner by capacity, “even thinks it has a shot at receiving a hardship waiver proves how broken the process is.”

Grassley and players in the ethanol industry feel too many waivers have been issued allowing companies to skip their obligations to the RFS, which undermines ethanol production in the U.S. and, in turn, corn producers.


3. More Rain Expected in Parts of Minnesota, South Dakota on Thursday

More rain is expected in parts of west-central Minnesota and most of South Dakota this afternoon and evening, according to the National Weather Service.

“Some storms could be strong to severe with large hail and strong winds, especially across northeast South Dakota and west-central Minnesota,” the NWS said in a report early Thursday morning.

The storms likely will hang around through the weekend into early next week.

Parts of the Dakotas and Nebraska have received up to six times the normal amount of precipitation in the past seven days, government data show, which is threatening corn planting.

In the Southern Plains where hard red winter wheat plants are growing, showers and thunderstorms are possible for the rest of the morning into the early afternoon today, the NWS said. The agency said there’s a slight chance of rainfall across the far eastern panhandles of Oklahoma and Texas on Friday afternoon.

Still, temperatures in some parts of the region are expected to hit triple digits.

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