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3 Big Things Today, May 5, 2022

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

1. Wheat Futures Surge in Overnight Trading

Wheat futures surged in overnight trading amid conflicting reports that India will restrict shipments of the grain.

Buyers have been desperately seeking alternative sources to Russia, the world’s biggest exporter of the grain, and Ukraine as Russian troops continue to attack their neighbor.

India is considering export restrictions, Reuters reported, but Indian government officials have denied the report.

Production in India is forecast by its government at 105 million metric tons, down from a prior outlook for 111.3 million tons amid a heat wave that likely has curbed yields.

The U.S. Department of Agriculture last month pegged Indian production at 109.6 million metric tons, unchanged month-to-month.

Wheat exports from India are seen at 8.5 million metric tons, which if realized would be a substantial jump from the 2.56 million metric tons the country shipped in the 2020-2021 marketing year, USDA data show.

Prices also are rising on extremely dry weather in the U.S. southern Plains where the hard-red winter wheat crop is growing.

Little rain has fallen in much of the southern Plains in the past month, according to the National Weather Service’s precipitation page. About 27% of the U.S. winter-wheat crop was rated good or excellent at the start of this week, unchanged from the previous week but down from the 48% that earned top ratings at this point last year, according to the USDA.

Some 23% was headed as of Sunday, behind the prior five-year average of 29% for this time of year.

Soybeans and corn also were higher as the pace of planting remains slow.

About 8% of soybeans were in the ground as of Sunday, behind the normal 13%, and 14% of the U.S. corn crop was planted at the start of the week, well behind the prior five-year average of 33%, the government said.

Wheat for May delivery jumped 18½¢ to $10.95 a bushel overnight on the Chicago Board of Trade while Kansas City futures jumped 21¢ to $11.44¼ a bushel.

Soybean futures for July delivery added 12¼¢ to $16.52¾ a bushel. Soymeal gained $4 to $422.20 a short ton, while soybean oil futures fell 0.61¢ to 81.82¢ a pound.

Corn futures were up 2½¢ to $7.96¾ a bushel.

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2. Ethanol Output Rises to Three-Week High, Inventories Decline

Ethanol output rose to the highest level in three weeks while inventories continued to decline, according to the Energy Information Administration.

Production of the biofuel in the seven days that ended on April 29 rose to an average of 969,000 barrels a day, the EIA said in a report.

That’s up from 963,000 barrels a week earlier and the highest since April 8.

In the Midwest, by far the biggest producing region, output rose to an average of 915,000 barrels per day, government data show.

That was the entirety of the gains for the week.

Output on the West Coast was unchanged at 9,000 barrels a day, the EIA said.

Production on the East Coast fell to an average of 10,000 barrels a day from 12,000 barrels, where it had been for five straight weeks. Gulf Coast output declined to 24,000 barrels a day, on average, from 25,000 barrels the previous week.

Rocky Mountain production dropped to an average of 13,000 barrels a day from 15,000 barrels, where it had been since March 18, the agency said.

Ethanol inventories, meanwhile, declined to 23.887 million barrels in the week through April 29.

That’s down from 23.965 million barrels a week earlier and the lowest level since the seven days that ended on January 14, the EIA said in its report.

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3. Flash Flood Warnings Issued For Parts of Oklahoma, Arkansas

Flash flood warnings are in effect this morning in parts of eastern Oklahoma and northwestern Arkansas, according to maps from the National Weather Service.

Heavy rains are falling in the area, where 2 to 5 inches of precipitation fell overnight, the NWS said in a report early this morning. Another inch is possible, and flash flooding is already occurring.

“Flash flooding of small creeks and streams, urban areas, highways, streets, and underpasses as well as other poor drainage and low-lying areas” has happened overnight, the agency said.

The Illinois River in Adair and Delaware counties in eastern Oklahoma was at 22.8 feet overnight. At 25 feet, severe flooding occurs in the areas. The NWS said the river should crest at 24.5 feet this afternoon before falling below flood stage tomorrow.

The flood warning in the region is in effect until tomorrow evening.

Farther north in central and eastern Iowa, some non-severe thunderstorms are expected today and this evening, the agency said.

“Thunderstorm chances will return at intervals from Saturday night into next week,” the NWS said. “Severe weather may be possible at times, but this risk will be better determined in coming days.”

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