3 Big Things Today, November 19, 2020

Soybeans Decline in Overnight Trading; Ethanol Production Falls First Week in a Month

1. Soybean Futures Drop Overnight on Technical and Farmer Selling

Soybeans plunged overnight on technical and farmer selling after prices yesterday reached a fresh four-year high.

Investors who were long the market, or had bet on higher prices, likely are selling contracts after prices jumped to the highest level since 2016 on Wednesday.

The increase in prices recently has led to farmer selling, which is adding supplies to the market. The good news for farmers is that the high prices came during harvest.

Futures have been increasing in the past few months amid strong demand for U.S. agricultural products and concerns about dry weather in Brazil, the world’s largest exporter of soybeans.

Overseas buyers have promised to buy 49.9 million metric tons of soybeans since the start of the marketing year on Sept. 1, up 125% from the same timeframe last year, the U.S. Department of Agriculture said in a report.

Importers have committed to purchase 34.2 million metric tons of corn since the beginning of September, a 174% year-over-year increase, the USDA said.

Wheat sales since the grain’s marketing year started on June 1 now stand at 17.2 million metric tons, a 13% increase from the same period in 2019.

Farmers have been selling supplies right off the combine this year in a bid to take advantage of the high prices, Reuters reported.

Soybean futures for January delivery fell 8 3/4¢ to $11.67 a bushel overnight on the Chicago Board of Trade. Soymeal was down $2.80 to $392.10 a short ton and soy oil lost 0.07¢ to 38.39¢ a pound.

Corn futures for December delivery declined 5¢ to $4.20 ¾ a bushel overnight. 

Wheat futures for December delivery fell 1 1/2¢ to $5.96 ¼ a bushel while Kansas City futures dropped 1 1/2¢ to $5.64 ¾ a bushel.

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2. Ethanol Production Drops First Time in a Month While Stockpiles Rise

Ethanol output last week declined for the first time in about a month while inventories continued to rise, according to the Energy Information Administration.

Production of the biofuel in the seven days that ended on Nov. 13 declined to an average of 962,000 barrels a day, the EIA said in a report.

That’s down from 977 million barrels a day, on average, the prior week and the first week-to-week decline since Oct. 16, government data show.

In the Midwest, by far the largest producing region, output was reported at an average of 916,000 barrels a day last week, down from 927,000 barrels a week earlier.

Gulf Coast production fell to an average of 15,000 barrels a day from 17,000 barrels, and West Coast output declined to 9,000 barrels a day from 10,000 barrels the previous week, the agency said.

East Coast output was unchanged at an average of 13,000 barrels a day and Rocky Mountain production was unchanged at 10,000 barrels, the EIA said.

Stockpiles, meanwhile, were up for the third straight week.

Inventories on Nov. 13 stood at 20.203 million barrels, up from 20.159 million a week earlier and are now at the highest level since the seven days that ended on Aug. 28, the agency said in its report.  

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3. Dry, Windy Weather Raises Wildfire Concerns From Missouri to Michigan

Red-flag warnings and wind advisories are the main weather threats in much of the Midwest this morning, according to the National Weather Service.

In the southern half of Missouri, southern Illinois and southern Indiana, along with parts of several other surrounding states, low humidity and strong wins will fuel any wildfires that develop, the NWS said in a report early this morning.

Southerly winds in parts of Missouri will be sustained at 20 to 30 miles an hour with gusts of up to 45 miles an hour. Relative humidity is pegged as low as 25% today.

In northern Illinois, northern Indiana and southern Michigan, meanwhile, strong winds are expected as gusts are seen as high as 50 miles an hour, the NWS said.

“Gusty winds could blow around unsecured objects,” the agency said. “Tree limbs could be blown down and a few power outages may result.”

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