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3 Big Things Today, May 3

Wheat Futures Again Lower Overnight; Ethanol Production Rises to Three-Week High.

1. Wheat Lower on Technical Selling Despite Oklahoma Crop Woes

Wheat futures were lower overnight despite a report that the Oklahoma wheat crop will be half of average.

Hard red winter wheat production in the state will total 58.4 million bushels, half of a normal crop, as only 2.36 million acres will likely be harvested of the 4.1 million that were planted, said Mark Hodges, the president of Oklahoma Genetics. Hodges was giving the results of a wheat tour in Oklahoma to participants of the Kansas Wheat Tour.

Still, prices declined after Kansas City futures closed higher last night. Prices have been lower in the overnight session the past two days, but hard red winter futures have turned higher. It’s likely technical selling on overbought conditions by investors is leading to the overnight sell-offs.

Members of the Kansas Wheat Tour assessed plants in the southwestern part of the state yesterday and expect yields of 36.8 bushels an acre in the region, according to the Wheat Quality Council, which puts on the event.

If rain falls between now and harvest, the crop could be average despite not having rain for the past six months, in some areas.

Soybeans and corn were both little changed.

Wheat for July delivery fell 4¾¢ to $5.22 a bushel overnight on the Chicago Board of Trade. Kansas City futures lost 5¢ to $5.50¼ a bushel.

Corn futures for July delivery fell ¼¢ to $4.04¾ a bushel overnight.

Soybean futures for May delivery rose ¼¢ to $10.43¼ a bushel. Soy meal fell $2.70 to $398 a short ton, while soy oil dropped 0.01¢ to 30.59¢ a pound.

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2. Ethanol Production Rises to Three-Week High, Stockpiles Also Increase                                      

Ethanol production in the week that ended on April 27 rose to the highest in three weeks while stockpiles increased.

Output of the biofuel in the U.S. rose to 1.032 million barrels a day, on average, after last week falling to 985,000 barrels, the Energy Information Administration said in a report. That’s the highest level of production since the week that ended on April 6.

Last week’s decline below a million barrels a day was the first time that’d happened since the first week of the year, according to the EIA.

Stockpiles, meanwhile, increased to 22.142 million barrels last week. That’s up from 21.701 million barrels seven days earlier and the highest inventory level since the end of March.

The EIA said last week that the U.S. exported a record 1.4 billion gallons of fuel ethanol in 2017, topping the old record set in 2011.

“The United States has seen continued growth in fuel ethanol exports over the past eight years as increases in both corn production and ethanol production capacity have outpaced domestic fuel ethanol consumption,” the EIA said. “U.S. fuel ethanol was exported to 35 countries in 2017, but more than half of all exported fuel ethanol went to Brazil and Canada.”

In other news, the USDA will release its Weekly Export Sales Report this morning. Analysts have pegged old-crop corn sales from 700,000 to 1 million tons, old-crop soybean sales are estimated from 300,000 to 600,000 tons, and wheat from zero to 30,000 tons, according to Allendale.

Sales in 2018-2019 for corn were seen from a -50,000 to 150,000, soybean sales from 150,000 to 350,000 and new-crop wheat sales from 100,000 to 300,000 tons, Allendale said.

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3. Storms Expected to Potentially Spawn Tornadoes in Iowa, Air Turns Drier in Southern Plains

Storms are expected in much of Iowa and western Illinois today with some turning severe, according to the National Weather Service.

Rain, large hail, and even a few tornadoes are expected in parts of central and southern Iowa today, the NWS said in a report early this morning. Locally heavy rainfall that could lead to flash flooding is likely.

Thunderstorms are expected to return late Saturday into Sunday, but the weather isn’t forecast to be as severe as it will be this week, the agency said.

In the Southern Plains, dry weather will return today after heavy rainfall in some areas yesterday, the NWS said.

“Much drier air and strong gusty southwest to west winds today, averaging 20 to 30 mph with higher gusts,” the service said in a report. “Relative humidity will fall to 15% to 20% across the southeastern areas (of the Southern Plains) where there is a significant risk of wildfire spread. Widespread heavy rain yesterday in these areas will help alleviate this threat some.”

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