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3 Big Things Today, September 1, 2022

Soybeans, Grains Drop Overnight; Ethanol Production Falls to Four-Month Low

1. Soybean, Grain Futures Drop in Overnight Trading

Soybeans and grains were lower in overnight trading amid concerns about global demand as central banks globally tighten monetary policy to battle inflation.

Central banks around the world, including the U.S. Federal Reserve, are raising interest rates and tightening fiscal policy in a bid to reign in inflation worldwide.

Fed Chair Jerome Powell said last week that the U.S. will face "some pain" amid increased interest rates. The European Central Bank has become increasingly hawkish as inflation in the bloc reached a record high last month.

Interest rate hikes of up to 75 basis points are on the table in the U.S. and European Union as inflation, while cooling, till remains high. That would increase the cost of borrowing and strikes fear that consumers will slow purchases.

Investors who were long the market likely sold contracts and booked profits, also causing the overnight price decline.

U.S. weather looks fairly benign today with some storms expected in parts of Kansas today, though dry weather is forecast in the northern Plains.

Rains likely will be limited this weekend, said Donald Keeney, an agricultural meteorologist with Maxar, in a note to clients. That will increase stress to crops in west-central areas of the Midwest but help with corn drydown in other areas, he said.  

Soybean futures for November delivery fell 16 1/4¢ to $14.06 ¼ a bushel overnight on the Chicago Board of Trade. Soymeal was up $2.50 to $417.60 a short ton, while soybean oil futures dropped 2.06¢ to 65.42¢ a pound.

Corn futures for December delivery lost 9¢ to $6.61 ½ a bushel.

Wheat for December delivery fell 8 3/4¢ to $8.22 3/4 a bushel while Kansas City futures declined 9 1/4¢ to $9.03 1/4 a bushel.

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2. Ethanol Production Falls to Lowest Level in Almost Four Months

Ethanol output dropped to lowest level in almost four months last week while inventories also declined, according to data from the Energy Information Administration.

Production of the biofuel decreased to an average of 970,000 barrels per day in the week that ended on Aug. 26, the EIA said in a report.

That's down from 987,000 barrels a week earlier and the lowest weekly production since April 29.

In the Midwest, by far the biggest producing region, output dropped to 911,000 barrels a day, on average, from 928,000 barrels the previous week, the government said.

That's the lowest since the seven days that ended on April 22.

Output in the Rocky Mountain region fell to an average of 13,000 barrels per day from 14,000 barrels a week earlier, the EIA said.

That was the entirety of the losses as West Coast production was unchanged at 9,000 barrels per day.

East Coast production rose to an average of 13,000 barrels per day, up from 12,000 barrels the previous week. Gulf Coast output increased to 25,000 barrels a day, on average, from 24,000 barrels, the agency said.

Ethanol inventories, meanwhile, fell to 23.533 million barrels in the week through Aug. 26.

That's down from 23.807 million barrels the previous week, the EIA said in its report.


3. Dry Weather Expected in North Dakota, Montana Thursday

Extremely dry weather may lead to prime conditions for wildfires in parts of North Dakota and Montana, according to the National Weather Service.

Red-flag warnings will take effect at 10 a.m. and last through midnight for much of Montana, the NWS said in a report early this morning.

Winds will be sustained from 10 to 20 miles an hour with gusts up to 30 miles an hour expected. Relative humidity will drop as low as 10%, the agency said. Temperatures will reach into the low-100s.

"Near critical fire weather conditions are expected this afternoon" for western North Dakota, the NWS said.

In central and southern Kansas, meanwhile, some isolated thunderstorms are possible today and tonight.

Dime- to quarter-sized hail and winds reaching 65 miles an hour are possible in the areas with the strongest storms, though most areas will remain dry, the agency said.

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