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3 Big Things Today, November 29

Soybeans Lower Overnight; Ethanol Production Rises While Futures Hit 13-Year Low.

1. Soybeans Decline as Futures Continue Roller-Coaster Ride

Soybean futures were lower in overnight trading, as prices continue their roller-coaster ride ahead of this week’s Group of 20 meeting in Argentina.

Traders on Monday were pessimistic about a trade deal between the U.S. and China as presidents Trump and Xi Jinping are scheduled to meet on December 1.

Trump said in a Wall Street Journal report this week that he is considering adding tariffs on imports of iPhones and laptops and wouldn’t back down from a plan to increase the rate of tariffs on some Chinese imports to 25% from 10% on January 1 if a deal isn’t hashed out.

Prices on Monday plunged 18¢. On Tuesday, however, analysts were saying that a deal likely will be worked out as neither side wants the trade war that’s been running since July to continue. That optimism, along with some bargain hunting, brought prices back. Futures gained about 30¢ on Tuesday and Wednesday.

Now, the less-optimistic traders are squaring their positions ahead of the meeting, which is scheduled to start on Friday.

Soybeans for January delivery fell 5¢ to $8.85½ a bushel overnight on the Chicago Board of Trade. Soy meal declined $1.70 to $308.60 a short ton, and soy oil lost 0.09¢ to 27.89¢ a pound. 

Corn futures for December delivery fell ¾¢ to $3.72½ a bushel.

Wheat for March delivery dropped 2¾¢ to $5.08¾ a bushel overnight, and Kansas City futures rose ½¢ to $4.92¾ a bushel.

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2. Ethanol Production, Inventories Rise Modestly, Futures Hit 13-Year Low

Ethanol production rose slightly last week while stockpiles of the biofuel also increased, according to the Energy Information Administration.

Output in the seven days that ended on November 23 averaged 1.048 million barrels a day, up from 1.042 million barrels the previous week, the EIA said in a report.

The Gulf Coast saw the biggest increase in production, rising by an average of 4,000 barrels a day to 26,000. In the Midwest, where by far the bulk of U.S. ethanol is produced, output rose by 2,000 to an average of 964,000 barrels a day, government data show.

Production on the East Coast was up 1,000 barrels to 24,000 barrels a day, while Rocky Mountain output was unchanged at 14,000 barrels a day and West Coast production stood fast at 20,000 barrels, the EIA said.

Inventories of the biofuel, meanwhile, rose to 22.93 million barrels last week, up from 22.791 million barrels the previous seven-day period. During the same week in 2017, stockpiles stood at 22.044 million barrels, according to the report.

Ethanol prices on Wednesday fell to the lowest level in 13 years. Analysts have been waiting for a decline in production, which hasn’t yet happened, and ethanol companies are seeing margins decline further, according to a Reuters report.

Shipments from Chicago were going for $1.15 a gallon, the lowest since June 2005, the report said, citing ethanol traders.

In other news, the USDA will release its Weekly Export Sales Report this morning. Analysts are expecting corn sales from 400,000 to 950,000 metric tons, soybean sales from 400,000 to 900,000 tons, and wheat sales from 250,000 to 500,000 metric tons, according to researcher Allendale.

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3. Winter Storm Watch in Effect From Montana to Northern Iowa, Significant Snowfall Forecast

A winter storm watch is now in effect for a wide stretch of land from Montana east into northern Iowa, according to the National Weather Service.

A large storm is brewing that will hit Montana and western South Dakota where up to 10 inches of snow, possibly more in some areas, are expected, the NWS said in a report early Thursday morning. Northeastern Wyoming likely will see about 6 inches of snow.

Much of eastern South Dakota and northeastern Nebraska are forecast to see 4 to 6 inches of snow with wind gusts of up to 35 mph starting on Saturday morning, the agency said. “Significant” impacts on travel are expected.

The storm warnings stretch all the way to where Minnesota, Iowa, and Wisconsin meet. That NWS has pegged accumulation in that area from 4 to 8 inches and ice accumulations of a light glaze as the storm hits Saturday morning, lasting into Sunday.

“A mix of freezing rain and snow is expected to spread into southern Minnesota Saturday morning that will transition to heavy snow Saturday afternoon,” the NWS said.

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