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3 Big Things Today, September 7

Soybeans Lower in Overnight Trading; Ethanol Production Rises, Exports Plunge.

1. Soybeans Modestly Lower on China Trade Worries

Soybean futures were modestly lower in overnight trading on concerns that the ongoing trade war between the U.S. and China will escalate.

The deadline on the comment period concerning additional tariffs on Chinese goods has passed, and many investors believe the Trump administration will impose the duties. The U.S. has threated to put levies on another $200 billion worth of Chinese goods.

While China can’t match that as it imports U.S. goods with less value, its Commerce Ministry yesterday said it would retaliate should Washington move forward with the new tariffs.

The countries currently have duties on $50 billion worth of the others’ goods.

Soybean futures for November delivery fell 2¾¢ to $8.36¾ a bushel overnight on the Chicago Board of Trade. Soy meal lost 20¢ to $314 a short ton, and soy oil fell 0.11¢ to 28.42¢ a pound.

Corn futures lost 2¼¢ to $3.64 a bushel overnight.

Wheat for December delivery fell 4¼¢ to $5.09½ a bushel in Chicago, while Kansas City futures declined 2¢ to $5.14¾ a bushel.

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2. Ethanol Production Rises to Four-Week High; Exports in July Plunge 31%

Ethanol production in the seven days that ended on August 31 jumped to the highest level in four weeks, while stockpiles declined, according to the Environmental Information Administration.

Output of the corn-based biofuel averaged 1.087 million barrels a day in the U.S. last week, up from 1.07 million barrels a week earlier. That’s the highest since the week ended August 3, the EIA said in a report.

Inventories, meanwhile, dropped to 22.703 million barrels as of August 31. That’s down from 23.061 million seven days earlier and the lowest levels since July 27.

Ethanol exports in July plunged 31% from June to 104.4 million gallons and were down 11% year over year, according to the government. Renewable Fuels Association analyst Ann Lewis said in an article on the group’s website this week that Canada is now the biggest importer of U.S. ethanol, taking the lead from Brazil.

Canada increased imports of U.S. ethanol for a sixth straight month, while volumes sent to Brazil have fallen throughout the year. They peaked in February at 103.2 million gallons, but then bottomed in May at 9.5 million gallons. Volumes rose in June but fell back to 18.8 million gallons in July.

Demand also was weak in India, the third-biggest market for U.S. ethanol, as imports plunged 57% to 11.6 million gallons, Lewis said.

Imports of ethanol from Brazil, however, have also declined. Only 1.6 million gallons of Brazilian ethanol has been imported into the U.S. so far this year, down considerably from 24 million gallons at this point in 2017, she said.

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3. Remnants of Tropical Depression Gordon Bring Rain, Flooding as They Move North

The remnants of Tropical Depression Gordon are wreaking havoc on several states as they move north into the Corn Belt.

Flood warnings and flash flood watches are or will be in effect for parts of eight states stretching from southern Arkansas to central Ohio, according to the National Weather Service.

In parts of southern Missouri, Illinois, and Indiana, “several rounds” of rain are expected through Sunday morning as a cold front and leftovers from Gordon move through the region. As much as 6 inches of rain are expected to fall across the area, the agency said.

In central Ohio, meanwhile, flash flood watches are in effect as thunderstorms are expected to roll through the area starting Saturday and lasting until early Monday morning. Up to 5 inches of precipitation are expected, which likely will cause flooding.

Locally heavier amounts are forecast, the NWS said.

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