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3 Big Things Today, May 7, 2020

Soybeans, Grains Higher Overnight; Ethanol Production Rises First Time in Nine Weeks.

1. Soybeans and Grains Improve Overnight on Economic Optimism

Soybeans and grains were higher in overnight trading on optimism that some states are beginning to reopen, which could improve demand for agricultural products.

Several states have eased restrictions on movement even as the COVID-19 virus continues to spread throughout the country.

Investors are betting the worst is over for oil, which was up in overnight trading. West Texas Intermediate crude futures surged almost 9% overnight, while international standard Brent crude rose 6%.

That could be an indicator that demand for gasoline and corn-based ethanol could improve in the near future. Stock futures also were higher in the premarket session.  

Still, the number of cases of the disease jumped to 1.19 million in the U.S., and the death toll increased by 2,523 to 70,802, the Centers For Disease Control and Prevention said late Wednesday.

Soybean futures rose 6½¢ to $8.39 a bushel overnight on the Chicago Board of Trade, while soy meal gained $1.60 to $289.70 a short ton, and soy oil added 0.32¢ to 26.16¢ a pound. 

Corn futures for May delivery rose 3¢ to $3.17¼ a bushel.

Wheat futures for July delivery jumped 7¼¢ to $5.24¾ a bushel overnight, and Kansas City futures surged 7½¢ to $4.85 a bushel.

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2. Ethanol Production Rises First Week in Nine, While Stockpiles Again Decline

Ethanol production rose for the first time in nine weeks, while stockpiles declined for a second straight week, according to the U.S. Energy Information Administration.

Output of the biofuel rose to an average of 598,000 metric tons in the seven days that ended on May 1, the EIA said in a report.

That’s the highest average in almost a month.

Ethanol output has been hit hard by the COVID-19 pandemic as demand for motor fuel has plunged with people staying at home.

In the Midwest, by far the biggest production area, output surged to an average of 571,000 barrels a day from 512,000 barrels a week earlier, the agency said.

West Coast output doubled to 6,000 barrels a day, on average, and Rocky Mountain production increased to 6,000 barrels a day from 5,000 barrels the previous week.

Gulf Coast production was unchanged at 6,000 barrels a day, while East Coast output declined to an average of 8,000 barrels a day from 11,000 a week earlier.

Stockpiles, meanwhile, dropped for a second straight week to 25.612 million barrels at the start of May, the EIA said. That’s up down from 26.337 million barrels the previous week and the smallest level since the seven days that ended on March 20.

The Renewable Fuels Association said this week that almost half of the ethanol industry’s production capacity has been idled due to COVID-19.

That’s led to reduced demand and lower prices for corn and lost jobs in rural areas, the RFS said. Supplies of ethanol coproducts including dried distillers grains are at risk, which could further hurt the livestock industry.

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3. Freeze Warnings Issued For Parts of South Dakota, Minnesota, and Ohio

A freeze warning is in effect for several counties in South Dakota, Minnesota, and east-central Wisconsin, with a freeze watch in surrounding areas, according to the National Weather Service.

Areas under the warning, which will start at 3 a.m. and end at 9 a.m. central Friday, likely will see temperatures as low as 28˚F. overnight in some counties, the NWS said in a report early this morning.

A separate freeze warning has been issued for much of southern Ohio and Kentucky for the same times overnight, the agency said.

The warnings essentially bookend a freeze watch that runs from northwestern Iowa through northern Ohio.

In northern Indiana and southern Michigan, there’s a chance that temperatures could fall as low as 26˚F. late Friday into Saturday morning, the NWS said.

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