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3 Big Things Today, May 29, 2020

Soybeans Lower Overnight; Ethanol Output Jumps to Almost Two-Month High.

1. Soybeans Slightly Lower Overnight on China Worries

Soybeans were slightly lower in overnight trading on demand concerns as tensions between the U.S. and China ramp up.

China’s government this week voted to impose a national security law that would override Hong Kong’s autonomy, angering U.S. officials who say the Asian nation is overstepping its authority.

President Donald Trump said the administration is unhappy with China, which could affect the Phase 1 trade deal signed by the countries – the world’s two largest economies – in January. The president is expected to address the trade agreement during a press conference today.

Still, prices are being underpinned as China and other countries have been making purchases of U.S. soybeans and other products in recent weeks.

The Philippines bought 138,000 metric tons of soymeal for delivery in the marketing year that ends on Aug. 31, the USDA said in a report yesterday.

Earlier this week the government reported sales of 258,000 metric tons of soybeans to China and sales of 216,000 tons of soymeal to an unnamed country.

Soybean futures for July delivery fell 2¼¢ to $8.44¾ a bushel overnight on the Chicago Board of Trade. Soymeal futures lost 20¢ to $284.10 a short ton and soy oil rose 0.1¢ to 27.49¢ a pound.

Corn futures were up 1¢ to $3.28½ a bushel overnight.

Wheat futures for July delivery gained 1¾¢ to $5.16¼ a bushel, while Kansas City futures added 3½¢ to $4.67½ a bushel. 

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2. Ethanol Output Rises to Almost Two-Month High While Stockpiles Again Decline

Ethanol production in the U.S. rose to the highest level in almost two months while stockpiles fell for a fifth straight week, according to the Energy Information Administration.

Output in the seven days that ended on May 22 jumped to an average of 724,000 barrels a day, up from 663,000 barrels a week earlier and the highest level since March 27, the EIA said in a report.

In the Midwest, by far the biggest producing region, production averaged 695,000 barrels a day, up from 630,000 barrels a week earlier. That was also the highest since March 27, government data show.

Gulf Coast production rose to 7,000 barrels a day, on average, from 6,000 barrels a week earlier, while Rocky Mountain output was unchanged at 7,000 barrels a day.

East Coast and West Coast outturn both declined to 7,000 barrels a day from 10,000 barrels the previous week, the EIA said.

Stockpiles in the week through May 22, meanwhile, dropped to 23.176 million barrels, the agency said.

That’s down from 23.626 million barrels and the lowest level since the seven days that ended on Jan. 10, the government said in its report.  

The Governors’ Biofuels Coalition, led by South Dakota Gov. Kristi Noem and Minnesota Gov. Tim Walz sent a letter to leaders in the Senate and House in support of two proposals that would assist renewable fuels producers who were hurt by the COVID-19 pandemic, the Renewable Fuels Association said in a statement yesterday.

The governors urged support of the Renewable Fuel Feedstock Reimbursement Act of 2020, which was introduced last week by Sen. Chuck Grassley and Sen. Amy Klobuchar, or the Renewable Fuel Reimbursement Program provision in the HEROES Act that was passed by the House.

RFA Chief Executive Geoff Cooper said in a statement Thursday that fewer than 70 of the 204 ethanol plants in the U.S. are operating at full capacity. About 60 are completely shut, and capacity utilization is now at less than 60%, he said.

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3. Flood Warnings in Effect in North-Central Missouri After Excessive Precipitation

Much of north-central Missouri is under a flood warning this morning after excessive rainfall overnight led rivers and streams in the state to overrun their banks, according to the National Weather Service.

The warnings stretch from the Kansas City area east to almost Macon, Mo., the NWS said in a report early this morning.

“Excessive runoff from heavy rainfall will cause flooding of small creeks and streams, urban areas, highways, streets, and underpasses as well as other drainage areas and low-lying spots,” the agency said.

Farther east in northern Indiana, southwest Michigan, and northwest Ohio, thunderstorms are expected through midday. Cooler weather also is expected to move into the area today, the NWS said.

Thunderstorms will exit the region this weekend but likely will fire again on Monday, though it’s too early to tell whether the storms at the start of next week will be severe.

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