3 Big Things Today, October 29, 2020

Soybeans, Grains Lower Overnight; Ethanol Production Rises to Seven-Week High.

1. Soybean and Grain Futures Decline in Overnight Trading

Soybean and grain futures were lower in overnight trading as harvest pressure, rainfall in South America, and fund liquidation all weigh on prices.

About 83% of the U.S. soybean crop was harvested as of Sunday, up from 75% the previous week and well ahead of the prior five-year average of 73%, the Department of Agriculture said in a report.

Corn producers had harvested 72% of the U.S. crop as of the start of the week, up from 60% a week earlier and the average of 56% for this time of year, the USDA said.

In Brazil, rainfall is forecast in parts of east-central Mato Grosso, the biggest producing state in the country, and in northern Goias and Bahia today, Commodity Weather Group said in a report.

“Rains narrow in northern Brazil next week but may trim the driest 20% (of) corn/soy further in the 11- to 15-day (outlook) as Parana rains expand,” the forecaster said.

Showers in Argentina are expected to widen in the next six to 10 days but likely will be limited in central and southeastern growing areas of the South American nation. Stress is limited to only 10% of the country’s corn crop, CWG said.

Also weighing on prices Thursday morning are reports that some investors may be selling their contracts and liquidating their positions after the recent run-up in prices.

Some speculative investors who were long the market, or bet on higher prices, may have exited the market after soybean prices earlier this week hit a four-year high and corn reached its highest level in over a year.

Soybean futures for January delivery dropped 2¢ to $10.52¾ a bushel overnight on the Chicago Board of Trade. Soymeal lost $1.10 to $375.80 a short ton, and soy oil fell 0.18¢ to 33.24¢ a pound.

Corn futures for December delivery fell 2½¢ to $3.99 a bushel.

Wheat futures for December delivery lost 5¾¢ to 6.03 a bushel in Chicago while Kansas City futures fell 4¼¢ to $5.39 a bushel.

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2. Ethanol Production Rises to Seven-Week High While Inventories Hit Almost Four-Year Low

Ethanol production jumped to the highest level in seven weeks while stockpiles dropped to an almost four-year low, according to the Energy Information Administration.

Output of the biofuel in the seven days that ended on Oct. 23 averaged 941,000 barrels a day, the EIA said in a report.

That’s up from 913,000 barrels a day, on average, the previous week and the most since the week that ended on Sept. 4, government data show.

In the Midwest, by far the largest producing region, production was reported at an average of 896,000 barrels a day, up from 871,000 barrels the previous week.

That’s the highest output for the region since the seven days that ended on July 24.

Gulf Coast production jumped to an average of 16,000 barrels a day from 9,000 barrels the previous week, the EIA said.

Rocky Mountain output was unchanged week-to-week at 10,000 barrels a day, on average.

Production on the East Coast, meanwhile, declined to an average of 10,000 barrels a day from 13,000 barrels a week earlier, and West Coast output fell to 9,000 barrels, on average, from 10,000 the previous week, the agency said.

Stockpiles, meanwhile, dropped to 19.601 million barrels in the week through Oct. 23, down from 19.721 million barrels the previous week.

That’s the lowest level since the seven days that ended on Dec. 30, 2016, according to the EIA.

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3. Flood Watches and Warnings in Effect For Parts of Missouri, Illinois, Indiana

Flood watches and warnings are in effect along a narrow band stretching from northeastern Oklahoma through southern Indiana this morning as thunderstorms rumble through the Midwest, according to the National Weather Service.

Storms are expected early today from southeastern Kansas through southern Missouri.

As much as 3 inches of rain have fallen in parts of southern Missouri in the past 24 hours, the agency said.

“Some flooding of low water crossings and creeks (and) streams from recent heavy rainfall will occur over southern Missouri,” the NWS said in a report early this morning. “Another inch of rain will be possible in some areas today, which will worsen flooding.”

In southern and central Indiana, heavy rain in some areas has led to flooding along country roads. As much as 3 inches of precipitation has already fallen, with another inch or more expected, the agency said.

Along the Gulf Coast, tropical storm warnings and high-wind warnings are in effect as the remnants of Hurricane Zeta move inland.

In parts of Alabama, winds are expected to range from 39 to 59 mph today, the NWS said. Flash flooding is possible with watches issued in the area, the agency said.

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