August 19, 2019

Good Morning,

I am back in the saddle again after a short break from the morning commentary! For those that are regular readers of the Didion Morning Market commentary you may have noticed the commentary has been written by Drake Bliss the past two months. Drake joined us this summer as an intern from Kansas State. Friday was his last day as he headed back to Kansas to prepare for his Senior Year at Kansas State. I would like to thank Drake for his contribution to our team this summer and wish him the best in his final year of school.

Softer markets to open the week with corn down 5 and soybeans down 6. Timely weekend rails over dry areas are adding pressure to prices this morning. The funds sold off more than 60,000 contracts in corn last week leaving them long about 13,000 contracts. The Dow is off to a good start following comments from Commerce Secretary Ross that the US will extend a 90 day exemption for US customers from a ban on doing business with China’s Huawei Technologies. President Trump indicated over the weekend that negotiations were doing very well with China and that they are talking.

The Pro Farmer tour is off and running this week and traders will be keeping an eye on the feedback from this group as they work their way thru OH, IN, IL, IA, NE, SD and MN. Early reports from the first morning are showing what every area in the Midwest has “variability”.

The pendulum has definitely swung and I look for them to take a short position home by the end of this week if weather and the crop tour continue to be bearish.

Have a Safe Day!

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

August 16, 2019

Good morning,

Grain markets were steady through the overnight of trade as they try for another recovery effort despite the August report still looming in the mind of traders and the bearish outlook in extended weather forecasts. Currently corn is up 5 cents and soybeans are up 8 cents. The weather development for the last half of August continues to look good for crop development. The rains are increasing this morning with some action in KS, NE, and MO. Also, there is a system moving through our area this morning here in WI that should bring a good amount of rain. Chances for rain continue through as late as Sunday for much of the Corn Belt then early next week turns drier before more rains emerge on the forecasts in the 6-10 day time frame. For the 11-15 day period, precipitation is expected to be scattered but mostly below normal and it is expected that temperatures will be above normal through August. President Trump seems to be a little more optimistic about the trade negotiations, however, China continues to snub the U.S. side of the talks. This is leaving the market confused about the situation and ultimately wanting more concrete proof rather than words. Going forward, markets will be looking heavily into the development of the talks hoping for progress to be made. The Pro Farmer crop tour will be making its way through the U.S. growing region next week. It is expected that the market will look to the results of the tour to see what they come up with for yield. The track record for this crop tour is very questionable, but with some uncertainty still in the yield potential for this year’s crop it should grab the attention of the markets nonetheless. Weather and trade talks will be the main focus of trade heading into harvest. My advice for producers would be to actively watch the markets and sell when you see an adequate bump in prices. I think trade will be volatile in the weeks to come and ultimately range bound. Taking advantage of the highs will definitely prove beneficial in marketing any remaining old crop.

Have a great Friday!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 15, 2019

Good morning,

Grain markets were mixed through the overnight of trade with corn and soybeans trading higher and wheat trading lower. Currently corn is up 2 cents beans are up 3 cents and wheat is up 3 cents. The rebounds being made by corn and beans remain a bit shaky at this point. The weather forecasts are calling for rains that will cover the bulk of the Midwest through the weekend with the heaviest amounts expected to fall in Iowa and surrounding states. Extended forecasts are showing that decent rains are expected to fall in the Corn Belt in the next 6-10 day time frame then give way for drier days in the 11-15 day time frame. Temperatures are expected to remain above normal through the end of August for the major growing regions of the U.S. Another reason that the rebounds remain on shaky footing is because the demand situation seems to be in shambles for both corn and beans. Total demand for corn fell by 125 million bushels and total demand for beans fell by 104 million bushels. I believe the fall in demand that was printed in August’s report was the biggest driver in market reaction, especially in the corn market. It would be very beneficial for the markets if the trade disputes were solved sometime in the near future, however, with the way things are going now I believe it is highly unlikely we will see a deal get done anytime soon. Markets will definitely keep an ear open regarding that situation and any beneficial news will surely be welcomed. Since the report was released on Monday, the markets haven’t shown a whole lot of life and I think the markets are susceptible to even further declines. New buying has really been absent since the report and the markets are deeply oversold. I think the markets may have to run out of selling before any buying occurs which makes prices susceptible to additional declines. Going forward, I would advise producers to actively watch the markets and any decent bump in prices should be taken advantage of. The corn market is expected to be choppy going into harvest and once corn finds its fair values they should trade within a range. Taking advantage of any little surges in the market will prove beneficial going forward!

Have a great day!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 13, 2019

Good morning,

Grain markets dropped sharply in yesterday’s trading session in response to the USDA releasing data that showed higher than expected crop volumes. Markets continue to price in the data this morning and try to find fair values for many of the commodities across the board. Corn is currently down 11 cents, soybeans are up 13 cents, and wheat is down 2 cents. The data came as a huge shock to the system as many traders were expecting the report to be quite bullish, especially in the corn market. However, the USDA had other things in mind and threw another curveball our way. The report printed corn production higher than all estimates in both a larger acreage number and a higher yield number. The larger area in corn production came at the expense of the soybean area as the soybean acres decreased by a fair amount. Going forward, there is really no longer a debate regarding the acreage numbers as the FSA certified report really verified the governments planted numbers plus or minus 1 million acres. With no area updates from the government until the October report, I believe markets will now shift their attention to yield and demand over the course of the next couple months. In the immediate future, the markets will continue to deal with the fallout from yesterday’s report. The corn market especially has some a lot of work to do to find fair values as liquidation will be the theme over the next few sessions. Once the new lows are established, I expect trade to ultimately become range bound and remain choppy as the yield debate will be a theme until producers can get into the fields and know what is really out there. The weekly crop progress report was released yesterday afternoon. It came in estimating the corn condition ratings at 57% GTE (56% GTE expected, 57% GTE last week, 70% GTE last year, 69.4% 5-year average). The soybean condition rating came in unchanged once again at 54% GTE (53% GTE expected, 54% GTE last week, 66% last year). To give a recap, I included the USDA’s numbers that were released with yesterday’s report.
USDA 2019-20 Corn and Soybean production

USDA Aug. 2019-20 estimate Average of analysts’ estimates Range of analysts’ estimates USDA July 2019-20 estimate
Corn
Planted Acres 90.000 87.998 83.494-89.800 91.700
Harvested Acres 82.000 80.050 76.114-81.900 83.600
Yield 169.5 164.9 161.0-167.2 166.0
Production 13.901 13.193 12.723-13.550 13.875
Soybeans
Planted Acres 76.700 81.006 78.000-83.500 80.000
Harvested Acres 75.900 79.890 77.300-82.800 79.300
Yield 48.5 47.6 46.0-49.0 48.5
Production 3.680 3.800 3.633-3.974 3.845

USDA 2018-19 U.S. Grain and Soybean ending stocks
USDA Aug. 2018-19 end-stock estimates Average of Analysts’ estimates Range of Analysts’ estimates USDA July 2018-19 end-stock estimates
Corn 2.360 2.392 2.220-2.490 2.340
Soybeans 1.070 1.065 0.988-1.124 1.050

USDA 2019-20 U.S. Grain and Soybean ending stocks
USDA Aug. 2019-20 end-stock estimates Average of Analysts’ estimates Range of Analysts’ estimates USDA July 2019-20 end-stock estimates
Corn 2.181 1.620 1.281-1.900 2.010
Soybeans 0.755 0.821 0.607-0.950 0.795

Have a great day!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 12, 2019

Good morning,

Grain markets are slightly lower across the board this morning as traders are gearing up for the much anticipated report that will be released at 11 a.m. Also, I believe the lower tone is in part of some beneficial rains that moved through the Corn Belt this weekend. Currently, corn is down 7 cents and soybeans are down 10 cents. The heaviest amounts of rain accumulated this weekend in the Western Corn Belt and lightest in the Far East. There is currently another system moving through the heart of the Corn Belt this morning and it is expected to bring much needed rains to the Eastern Corn Belt through tomorrow. After the beneficial push of rains moves through, extended forecasts show mostly warm and dry weather moving into the last half of August. There is little left to be said before the USDA’s data release this morning. Either the bulls or the bears will be happy with the release of the data, but either way at least some uncertainty will be solved and there will be a better benchmark for our crops going forward. Much of the focus will be on the new crop harvested area and expected yield number for corn. With the magnitude of these numbers we expect the price reaction to be quite swift and quite violent in either direction as the market will try and re-balance the new information. Included is the average estimates of what analysts have predicted the USDA will release for new crop production and ending stocks.

USDA 2019-20 Corn and Soybean production
USDA Aug. 2019-20 estimate Average of anlysts’ estimates Range of analysts’ estimates USDA July 2019-20 estimate
Corn
Planted Acres 90.000 87.998 83.494-89.800 91.700
Harvested Acres 82.000 80.050 76.114-81.900 83.600
Yield 169.5 164.9 161.0-167.2 166.0
Production 13.901 13.193 12.723-13.550 13.875
Soybeans
Planted Acres 76.700 81.006 78.000-83.500 80.000
Harvested Acres 75.900 79.890 77.300-82.800 79.300
Yield 48.5 47.6 46.0-49.0 48.5
Production 3.680 3.800 3.633-3.974 3.845

USDA 2018-19 U.S. Grain and Soybean ending stocks
USDA Aug. 2018-19 end-stock estimates Average of Analysts’ estimates Range of Analysts’ estimates USDA July 2018-19 end-stock estimates
Corn 2.360 2.392 2.220-2.490 2.340
Soybeans 1.070 1.065 0.988-1.124 1.050

USDA 2019-20 U.S. Grain and Soybean ending stocks
USDA Aug. 2019-20 end-stock estimates Average of Analysts’ estimates Range of Analysts’ estimates USDA July 2019-20 end-stock estimates
Corn 2.181 1.620 1.281-1.900 2.010
Soybeans 0.755 0.821 0.607-0.950 0.795

Have a great day!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 8, 2019

Good morning,

Commodities are slightly higher across the board this morning as weather forecasts call for drier days in the Midwest and traders begin to even positions ahead of the USDA supply and demand report that will be released next Monday at 11 a.m. Currently, corn is up 2 cents and soybeans are up 10 cents. We continue to see markets re-positioning ahead of the release of the USDA data. Prices are currently bouncing off 10 week lows and we are seeing bargain buying and some short covering. Also, weather forecasts have evolved in the last 24 hours and are now leaning on the drier side which raises some concerns over the drier areas in IA, IL, and northern IN.

The international news agency, Reuters, released an average estimate of what the USDA supply and demand report will entail. The report estimates that corn yield will be reported at 164.9 bu/acre. The estimates ranged anywhere from 161 bu/acre to 167.2. Reuters expects the USDA to say 87.99 million acres of corn was planted with 80.050 million acres actually being harvested. The range of estimates for corn planted area spans 6.3 million acres, ranging from 83.49 to 89.8. The analysts included in Rueters’ pre-report survey believe that planted soybean acres on Monday’s report will range from 78 to 83.5 million acres with the average trade guess at 81.006 million acres. The trade expects the yield to be 47.6 bu/acre. The range of estimates were from 46 to 49 bu/acre.

Awaiting the report, I expect prices to remain range bound and not move too far one way or the other. I believe the only thing that could cause a change in market prices ahead of the report would be a significant change in the weather. Rains are in the forecasts for much of the drier areas, however, in the last 24 hours forecasts have begun to sharply disagree in the placement and coverage of those rainfalls. So confidence in the forecasts remains pretty low. In the short-run, how these rains perform will be a key driver in the markets. I continue to advise producers to put in firm offers with your buyers before the report gets here. By doing so, you give yourself a chance to lock in your crop at a profitable level you deem adequate without having to constantly watch the markets.

Have a great day!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 7, 2019

Good morning,

Grain markets were relatively steady through the overnight of trade with corn futures unchanged and soybeans a cent higher. In the overnight session we saw a lower volume of trade as we expect many traders are gearing up for the report that is going to be released here on the 12th. Currently, corn is down a cent this morning and soybeans are down 3 cents. There’s not a whole lot of fresh news here in the markets today. Leading up to the report, I expect many traders to keep a close eye on the U.S. – China trade talks looking to see if they intensify any more than they already have. Also, I expect many to keep an eye on the development of weather forecasts. There are some drier areas that are becoming a bit more desperate for rainfall. The weather models seem to be struggling a bit determining the placement and intensity of rainfall to come in the next few weeks. With such a late planting for much of the U.S. corn crop this year many traders become concerned with any discerning weather that can still affect the yield potential. I believe trade will remain choppy leading up to the report, trading within its already established ranges until we get that data at the beginning of next week. There have been numerous private production estimates that have hit the markets in the last couple days and more are expected. There has been a large spectrum of predictions of what will come from the USDA data. It isn’t safe to say what will be released on Monday and there is still a lot of uncertainty running through the minds of some anxious traders. In the next few days to come, I would continue to advise producers to put in firm offers with your buyers to capitalize on a sudden run in the market.

Hope you have a great day!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 5, 2019

Good morning,

Grain markets are lower through the overnight trading session as cool weather remained over the weekend and the next 5 day forecasts show chances of rain for much of the Corn Belt. Also, traders are becoming concerned to how China will retaliate if the tariff hike is implemented in September. Corn is currently down 4 cents and soybeans are currently down 11 cents. President Trump stated that the 10% tariff hike could be revoked if China steps up U.S. ag purchases. Many will be following closely to see what comes in the U.S. – China trade disputes hoping to hear some better news in the weeks to come. The weekly crop progress report will be released this afternoon at 3 p.m. Analysts are estimating that corn condition will come in at 57% GTE (58% GTE last week, 71% GTE last year, and 69.5% 5-year average) and the soybean condition to come in at 54% GTE (54% GTE last week, 63.4% 5-year average). Ultimately, not a whole lot of fresh news to come over the weekend besides the fact that the U.S. and China are failing to make up any ground regarding the trade talks. Markets continue to remain volatile as the weather remains benign and no progress is being made with China. I would continue to advise producers to put in firm offers with your buyers to take advantage of any run in the market after the report. With that being said, it isn’t safe to rule out a release of unexpected data. If you are sitting on a large amount of old crop I would consider taking some risk away by looking to sell some amount of corn this week before the report gets here.

Have a great day!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 2, 2019

Good morning,

The technical selling spree continued in yesterday’s session with many traders liquidating their long positions. Both corn and soybeans were pushed to 10 week lows. However, through the overnight of trade the grain markets have made a corrective bounce. Corn is currently up 6 cents and soybeans are up 5 cents. Today’s session will be important in determining if the markets will be able to hold and stabilize this overnight bounce. If we fail to hold the overnight rebound in prices we’re likely to test the lows again trying to find new buyers as the market is still speculatively long. President Trump intensified the pressure on China to reach a trade deal. He announced yesterday the imposition of an additional 10% tariff on the remaining $300 billion of Chinese goods starting September 1. The trade disputes definitely hurt the demand side of U.S. grain and oilseeds, so reaching a trade deal will prove crucial for our markets. It was expected that a trade deal would be reached by the end of the year, but with the negotiations being pushed back more and more it makes you wonder when it will really happen. Heavy rains fell overnight in CO, OK, and KS. Those same rains are expected to linger for a while and will disperse by tomorrow. Corn Belt action is expected to stay scattered until the 6-10 day time frame and above normal precipitation is expected in the 11-15 day time frame. Temperatures will trend cooler in the northern plains and belt, and trend warmer far south. The weather and any technical indicators will continue to be closely watched leading up to the August report. I would continue to advise producers to put in firm offers with your buyers leading up to the report. The outlook for the report still remains bullish, so being able to capitalize on a sudden run should prove beneficial.

Have a great Friday!

Drake Bliss
920-348-6817
dbliss@didionmilling.com

August 1, 2019

Good morning,

Markets were steady/mixed through the overnight of trade as they are now trying to make a rebound from the month end selling spree in yesterday’s session. This morning corn is currently down 3 cents and soybeans are down 6 cents. The drop in prices we saw yesterday were due to technical indicators in large part. Key supports failed early on in the trading session which spurred many traders to liquidate their long positions. Also, the non-threatening weather and the U.S. – China trade talks dwindling away for the time being didn’t help with the matter. Overall, there wasn’t much standing in the way for the speculative selling. The resolution to the ongoing trade issues remains elusive. Although not confirmed, I have heard that the chance for face-to-face trade talks have now been moved back a month and will take place sometime in September. Going forward, the next few sessions will be important. Even further liquidation is very possible as the markets try to stabilize. Traders will be keeping a very close eye on the charts. It can be expected that trades will be made based on technical indicators to finish up this week. Overall, the weather remains benign with normal to cooler temperatures. Currently, we aren’t seeing many chances for rain in our area until later in the week next week. I would continue to advise producers to put in firm offers with your buyers leading up to the August 12th report. Also, if you are still sitting on a large amount of old crop, I would consider selling some amount before the report to take some risk away from the chances of prices falling after the report. We are now a week and a half away from the much anticipated report and having a good marketing plan for before and after the report should prove beneficial!

Have a great Thursday!

Drake Bliss
920-348-6817
dbliss@didionmilling.com