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3 Big Things Today, October 27, 2022

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

1. Wheat Futures Rise in Overnight Trading

Wheat futures were higher in overnight trading on a report that grain shipments from Ukraine have slowed.

Exports from Ukraine have declined in the past 10 days, Reuters reported, citing data from the country's farm ministry. Volumes so far in October are down 9% year-over-year, the report said.

It's still not certain that the so-called Black Sea Grain Initiative, the deal brokered in July that allows grain shipments from Ukraine, will be extended past its November deadline, increasing uncertainty about shipments from the region.

Still, United Nations Undersecretary General for Humanitarian Affairs Martin Griffiths said he's "relatively optimistic" that the agreement will be extended.

Also boosting prices overnight was a report from the Rosario grain exchange estimating the country's wheat crop at 13.7 million metric tons, down from a previous outlook for 15 million tons.

Soybeans and corn were modestly higher in overnight trading on expectations for some drier weather next week.

Rain in parts of Brazil including the state of Rio Grande do Sul will improve soil moisture a bit, but more water is needed to end dryness that's developed in the area, said Don Keeney, an agricultural meteorologist with Maxar.

In Argentina, rains Sunday will help soil moisture, but dry weather is expected to expand next week, he said.  

Wheat futures for December delivery gained 12½¢ to $8.53 a bushel overnight on the Chicago Board of Trade, while Kansas City futures added 10 ¾ ¢ to 9.51 ½ a bushel.

Corn for December delivery was up 3¼¢ to $6.88 ¼ a bushel.

Soybean futures for January delivery gained 4 ¾ ¢ to $13.97 ½ a bushel. Soymeal rose $3.50 to $412.20 a short ton, while soybean oil lost 0.34¢ to 73.08¢ a pound.

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2. Ethanol Output Surges to Three-Month High, EIA Says

Ethanol production jumped to the highest level in almost three months, and inventories rose in the seven days that ended on Oct. 21, according to the Energy Information Administration.

Output averaged 1.033 million barrels per day, up from 1.016 million a week earlier, EIA said in a report.

That's the highest since the week that ended on July 29.

In the Midwest, by far the largest producing region, output was reported at 974,000 barrels per day, on average — also the highest since late July — up from 961,000 barrels a week earlier, the government said.

Gulf Coast production increased to an average of 23,000 barrels per day from 19,000 barrels, a three-week high.

That was the entirety of the gains for the week, as Rocky Mountain output was unchanged at 15,000 barrels a day.

East Coast production fell to 12,000 barrels a day from 13,000 barrels a week earlier, and West Coast output was down to 8,000 barrels a day from 9,000 the previous week, the agency said.

Ethanol stockpiles, meanwhile, rose to 22.291 million barrels, up from 21.844 million a week earlier. That's the highest level in almost a month, EIA said in its report.

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3. Dry Weather Forecast For Southwestern Kansas This Weekend

Dry weather is expected to move into the southern Plains starting tomorrow, increasing the chance of wildfires, according to the National Weather Service.

"The potential exists for elevated fire conditions to increase in coverage across southwest Kansas this weekend," NWS said in a report early this morning.

The fire risk will increase from elevated to near critical on Monday and Tuesday.

In southern Oklahoma, however, thunderstorms are possible tonight, the agency said. The storms may bring hail and wind gusts up to 60 mph.

"The chance for rain with embedded thunderstorms will continue into the day Friday, primarily across southern Oklahoma an western north Texas," NWS said.

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