January 16, 2020

Good Morning,

Looks like a case of “Buy the Rumor, Sell the Fact” in grains the last two days. Following yesterday’s formal signing of the Phase 1 deal, the market will remain skeptical until we see actual purchases from China. And those purchases will have to be in large volumes to move this market. Yesterday’s signing came with comments from the Chinese that they will be active buyers “when market conditions are appropriate”. This raises the question of how hard of a commitment is this deal and how long will it actually play out? I would expect buying will be slow in the front end unless we see some delays in South Americas harvest due to weather. Brazil corn and soybeans are still trading at a discount to US commodities into China without tariffs.
South American weather continues to be favorable overall following recent rains. Models remain in agreement for the balance of the month with a drier pattern developing over the next 10 days across Argentina and Southern Brazil. Models show rain moving north into Mato Grasso and will provide moisture to the majority of the Brazilian bean crop and safrihna corn acres for seeding. We will have to continue to monitor the conditions in Argentina, but for now there are no major threats to their pending record production.
The majority of producers and traders (myself included) were expecting the markets to at least trade higher after yesterday’s signing. The markets actions the last two days are reminders that you should take advantage of opportunities that are presented rather than waiting on something that may or may not materialize.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

January 14, 2020

Good Morning,

China and the US are scheduled to sign phase one tomorrow which is becoming old news, but the psychological implications of this may be more than enough to move the markets higher tomorrow or Thursday for a short period of time. How they are planning to divvy up the money will be the biggest takeaway from tomorrows deal.

Many question the ability of China to be able to meet the obligation to purchase 50 billion in energy supplies and raise ag purchases to 32 billion, over the 24 billion previously spent. China would also need to buy 80 billion is manufactured goods. Energy exports to China were about 8 billion in 2017 and 2018. US Crude, liquefied natural gas and ethanol will have to play a major part to jump imports from the 25 billion a year, two year commitment, but it is doable. The private companies are worried that such a massive change in in flow would disrupt domestic markets. The farm and energy program in China is a subsidized mess, that is continually changing in policy. More changes will be coming again, probably a whole new price support or something along those lines. Right now they have an inflation problem, so that needs fixed first. China imported almost 10 mmts of beans last month, which is a huge amount.

The weather in Southern Brazil and Argentina is much different than yesterday. There is a split in the forecast that takes rain out of Southern Brazil and puts it in Southern Argentina. Rain totals increases to 1.5 inches for Argentina. Temps are in the lower 90’s which is normal for this time of year.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

January 10, 2020

Good Morning,

Report Day! Prior to the 11 am USDA report, there is no news that will move the markets. Estimates are listed below. Unless there is something dramatic in today’s report I would expect traders resume trading politics and will start to focus on the size of this next years acres and potential production.

USDA 2019-20 corn and soybeans
January Report Average Estimate November 2019
Corn Production 13.513 13.661
Corn Yield 166.2 167.0
Harvested Acres 81.350 81.815

Soybean Production 3.512 3.550
Soybean Yield 46.6 46.9
Harvested Acres 75.46 75.62

US Quarterly Stocks as of Dec. 1, 2019 , in billion bu.
January Report Average Estimate December 2018
Corn 11.511 11.937
Soybeans 3.186 3.746
Wheat 1.917 2.009

US 2019-2020 Ending Stocks in billion bu.
January Report Average Estimate December
Corn 1.757 1.910
Soybeans .424 .475
Wheat .969 .974

Check back after 11 am for the updated numbers.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

January 8, 2020

Good Morning,

Markets are mixed this morning with corn down 1 and soybeans up 2. There appears to be very little action in the markets as traders anxiously await Fridays report. Funds have reduced their short positions in corn and soybeans over the last couple weeks with the holidays and unknowns of where the Chinese tariff talks and potential war escalations with the Middle East may lead us. Last night’s Iranian missile strike on US bases in Iraq resulted in no casualties, but does have traders on edge wondering what if any follow up there will be from the US or Iranian leaders.
South American weather forecast has regular rain coming into the 18th f January. Argentina has moved back to a normal pattern seeing rains every few days. Southern Brazil is back to steady rainfall.
The sow herd in China expanded 2.2% from November and is up 7% from September. The hog herd was estimated to be down 41 percent from a year ago, but is slowly building back up. The curve on growth is going to steepen in coming months, with most all female pigs begin held back. Some estimate it will take years to build back up, but at the current pace it will be much quicker than that. This is what I believe will increase the demand for US soybeans long term.
This year’s crop quality is not good with light test weight and higher foreign material being seen across our draw area. This in addition to corn that dried down much harder than years past increases the possibility of grain going out of condition in storage. Producers should be actively monitoring their bins and coring more frequently than years past. I would advise moving your grain early and re-owning on paper if you believe the markets are going to improve.

Look for choppy trade to continue ahead of Fridays Report.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

January 7, 2020

Good Morning,

Prices are mostly lower following a rather boring session overnight. Outside markets are relatively quiet. Corn is down 1, beans down 2 and wheat off 2. The funds will spend the next three days preparing for Friday’s final production figures and December 1 stocks reports from the USDA. The funds are currently short 91,000 corn and 6,000 bean contracts.
When we finally get a look at the numbers the average guess on corn ending stocks is expected to come in just under 2 billion bu. and just over 500 million bu. for beans. Both numbers would be modest increases from the USDA’s last estimates in December as lower exports offset any reductions in yield. Corn exports, in particular, have disappointed this year as reduced competition from South America and a rise in prices out of the Black Sea did little to spur any additional export sales.
If you have not been marketing old and new crop bushels I would strongly suggest you step to the plate. Uncertainty in the markets are the only guarantee we have at this time. Be sure to get sales on the books and offers in with your buyers before Fridays USDA report. I would advise active selling of both old and new crop corn at current levels. This years crop left a lot to be desired when it comes to quality.(light TW and Higher Foreign Material) Bins should be cored and monitored more frequently this year to prevent grain going out of condition.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

January 6, 2020

Good Morning,

Markets are mixed this am with corn down 1 and soybeans up 2 as the risk off trade continues to hang over the Ag markets as traders ponder the possibility of an the Iranians retaliating. We will get a look at the USDA’s final numbers for 2019 production on Friday. This should help underpin the market with the beans up 2, corn down 1 and wheat off 2.
The mullahs in Iran are not happy after the targeted assignation, but the Iraqis are also not happy leading to their parliament asking all non-Iraqi military forces to leave the country. President Trump is not pleased with move and threatened sanctions as the political relationship between the US and Iraq continues to deteriorate. The Iraqi’s have been a consistent buyer of US wheat over the years and it will bear watching to see how future tenders play out. This morning wheat is trading 6 lower.

The Chinese have formally acknowledged that they will send Vice Premier Liu to Washington on January 13th for a signing ceremony at the White House on the 15th. As good as it feels to put this whole thing in the rear-view mirror and move on, we cannot forget that there remain no specifics when it comes to just how the $80B in commodity purchases over the next two years will be broken down. Beijing is expected to begin allowing purchases of US Ag products within the first 30 days following the agreement, but how much of their recent buying spree in beans and pork/beef remains to meet their current needs.
The major weather models are in agreement in calling for favorable weather across South America. The EU model does look wetter for southern Brazil and Argentina over the next ten days with the GFS showing the rains arriving in the 11 to 15 day window. There is no extreme heat in the forecast with highs across Argentina expected to stay in the 80’s to low 90’s and mid-80’s and mid-90’s in for Brazil.
If you have not been marketing old and new crop bushels I would strongly suggest you step to the plate. Uncertainty in the markets are the only guarantee we have at this time. Be sure to get sales on the books and offers in with your buyers before Fridays USDA report. I would advise active selling in both old and new crop corn at current levels.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

January 3, 2020

Good Morning,

Markets are softer overnight with corn down 3 and soybeans down 10 as traders take a risk off approach after a US drone strike overnight killed an Iranian General. News that General Qassem Soleimani, the head of Iran’s elite Quds Force was killed in an air attack at the Baghdad international airport prompted expectations of Iranian retaliation against US and Israeli targets. There is no immediate indication how Iran would respond but they have seized oil tankers in the past and shot down US drones. General Soleimani was a top general in Iran that has been killing Americans and other innocent people for Decades.
Iran and China have been growing closer over the last year with tariffs between the US and Chana. Some analysts believe that this recent strike could have major impacts on the US and Chinese trade deals that have been in the works. (The “Phase 1” deal has still not been signed)
South American weather continues to look favorable for improved weather in the southern areas of Brazil and Argentina over the next 7 days. Showers are developing in the drier areas in this timeframe which will continue to keep crops in good shape.
The next USDA report will be one week from today on January 10th. Trade is looking for US 2019 corn production near 13,600 mil. Bu compared to the USDAs last report of 13,661. Soybeans are projected near 3535 mil. Bu vs. the USDA 3550. December 1st corn stocks are estimated near 11,600 compared to 11,937 lasts year. December 1st soybean stocks are estimated at 3.175 compared to last year’s 3.746.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didonmilling.com

January 2, 2020

Happy New Year!

Early calls are mixed to slightly higher with more of a risk on tone in the market. The Funds are net short soybeans, soymeal and corn and net long Chicago wheat and soyoil. I would expect the funds could begin to cover some of their shorts before the USDA Jan 10 report.
Talk that the list and amounts that China will agree to buy under the Phase 1 deal will not be announced could be negative for the corn. Soybeans could see some buying on the news that China is expected to buy more soybeans than any over commodity. China though may not start buying US Ag goods until February or later.
I would advise producers to put offers in with your buyers for old crop corn and soybeans before the January 10th Production and S&D report. I would target $3.99-$4.08 on the CH CBOT and $9.60-$9.85 on the SH CBOT. We have struggled to trade above these levels over the last 5 years. I believe producers should also be active sellers of the 2020 new crop at current prices.($3.80) With the potential for 94-100 million acres of corn being planted this spring these current prices will not be maintained. We had approximately 90 million acres planted last year and the total prevent plant acres around 11 million the potential for acres to surpass 94 million acres is very high.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

December 31, 2019

Good Morning,

Markets opened softer this morning with corn down 1 and soybeans down 4 as traders wrap up trading for the year.
South American weather remains bearish the markets with very favorable weather over the last week and forecasts for decent precipitation in the 1-5 day forecast. With the lack of any weather concerns for South America and in most cases very favorable weather it will be hard to rally the market on weather.
Yesterday’s export inspections came in below the range of expectations with 409 mmt which is less than half the level seen last year. We are currently 17 weeks into the marketing year and we are 390 million bushel behind last year. The US continues to struggle with not being the most competitive corn on the market with Argentina and Ukrainian corn both less expensive after freight.
Vice Premier Liu He has accepted an invitation to lead a delegation to the US this Saturday where he is expected to sign the phase one deal that would significantly de-escalate the US-China trade war. This is positive news, but I think we need to realize that the damage that has been done over the 18 months is going to linger for years to come. During this trade war, we have invited Brazil, Argentina and Ukraine to the soybean production party and they will remain competitive going forward.
I would advise producers to put offers in with your buyers for old crop corn and soybeans before the January 10th Production and S&D report. I would target $3.99-$4.08 on the CH CBOT and $9.60-$9.85 on the SH CBOT. Looking back over the last 5 years we have struggled to trade above these levels.

I would like to thank all of you for business in 2019 and look forward to serving your grain marketing needs in 2020. May you and your family have a prosperous new year!

Garry Gard
920-348-6844
ggard@didionmilling.com

December 26, 2019

Good Morning,

Opening calls are mixed to slightly higher as some traders return from the holiday break. Most of the global markets will remain closed which will limit volume in the ag sector. Optimism over the China trade deal and a winter storm that is set to hit the Dakotas and northern Minnesota this weekend into early next week will add some support to the trade. Snowfall of 8-16 inches is expected from Central Nebraska to northern Minnesota and eastern North Dakota. This storm will be very similar to the one that hit this area in October.
Favorable South American weather is in the forecast with moderate rainfall for Brazil over the next 6-10 days and rainfall finishing by Tuesday in Argentina then turning drier over the next 6-10 days.

Today’s light volume could create swings in the market giving traders and producers an opportunity to cash in ahead of the New Year.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com