April 3, 2020

Good Morning,

Markets are higher this morning with corn up 1, beans up 1 and wheat up and wheat up 5 to start the day.
OPEC is scheduled to hold a virtual meeting on Monday to discuss a new agreement to reduce output. Traders are expecting some sort of resolution between Russia and Saudi Arabia to bring the oil war to an end. President Trump indicated that his conversations with Russia’s President Putin and Saudi Arabia’s Crown Prince suggested that they were willing to cut 10-15 million barrels per day. However I don’t expect to see much support in the corn market as ethanol producers won’t see any relief until people return to more normal driving patterns.
With the drop in ethanol prices, plants shutting down, storage tanks filling and demand down as people stay home and leave their cars in the garage it could be a long time before there is demand in the ethanol industry again. I do not expect much of an upside in old crop corn with the sudden lack of demand and expectations for large new crop acres. The 2019 crop has a lot of quality issues which is going to make it even more difficult for producers sitting on unpriced inventory. New crop prices do not show a lot of upside potential at the present time and if we get anywhere near the acres projected in Tuesday’s report we will be looking at a 2.5-3.0 billion bushel carryout. Those type of numbers are going to make the current fall prices of $3.20 look good.
At Didion we are currently buying old crop corn for the summer months to fill our mill needs. Quality will be monitored closely and we will be sticking very tightly to our discount schedule as everything we will be buying will have to go to our mill.

Have a Safe Day!

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

April 2, 2020

Good Morning,

Markets are a little stronger this am with corn up 3 and soybeans up 2. The US Dollar is higher at 100.15, the Dow is up 500 points and crude oil is up $5.25 to $25.50 after China announce they would buy crude oil for their strategic reserves.
Oil prices have jumped on expectations Saudi Arabia and Russia will ease the pressure off the oil market. Crude oil is up nearly 20% on the day to trade back above $24 a barrel after President Trump told CNBC’s Joe Kernen he spoke with Russian President Putin and Saudi Crown Prince Bin Salman, adding he expects both countries to cut production by about 10M barrels.
The news of Beijing pledging to take advantage of the 60% decline in crude oil prices to increase their strategic reserves has helped place a bid beneath the corn market this morning. The idea is that the Chinese intend on securing enough oil for about 90 days or somewhere in the area of 900M barrels. President Trump will meet with US oil industry executives tomorrow. The trade will be watching China closely in terms of their buying.
Look for choppy grain trade continues as the break in prices at the end of last month starts to uncover new buyers as we head into a new month and quarter. The combination of the Chinese decision to buy crude and the potential truce between the Saudis and Russians in their price war likely provides some measure of confidence to traders that was clearly lacking yesterday.

Have a Safe Day!

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

March 31, 2020

Good Morning,

Markets are softer on the open with corn and wheat down 2 and soybeans down 4. Look for quiet trade ahead of this morning’s USDA report which will be released at 11am. Estimates are listed below.

USDA Quarterly Stocks (Billion Bushels)
USDA March 1, 2020 Average Estimate
Corn 7.953 8.125
Soybeans 2.253 2.241
Wheat 1.412 1.432

USDA Prospective Plantings (Million Acres)
USDA March 1, 2020 Average Estimate 2019 Final
Corn 96.99 94.328 89.7
Soybeans 83.51 84.865 76.1
Wheat 44.65 44.982 45.2

I would not be surprised by a significant change in the corn stocks report, and it could be in either direction, but my bias is to the downside. Up to 1.2 billion bushels of corn were still in the field when USDA last surveyed in December. The USDA asked farmers to estimate bushels in the field, and it considered those bushels “stored on the farm.” Much of that corn has been harvested, giving farmers a better idea of its yield and quality which is what could move stocks dramatically either way in today’s report. Unfortunately even if the stocks come in lower, demand for corn in the ethanol industry is falling like a rock and will not be coming back anytime soon. Add on a 92-93 million acre corn crop at trend line yield and we have no reason to move the market higher.

Check back after 11am for the updated numbers in today’s report.

Have a Safe Day!

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

March 30, 2020

Good Morning,

Markets are softer this morning with corn down 5, what down 6 and soybeans unchanged.

Overall the markets look to start the week off on the right foot ahead of tomorrow’s Stocks and Planting Intentions report. The average guess on corn acreage to be 94.3M acres, soybean acreage at 84.9M acres, and wheat acreage just shy of 45M acres. Corn stocks are expected to fall 5.7% from March 2019 while soybean stocks are projected 17.8% lower than year ago. Both should be considered neutral/friendly.
Corn has been held back by the slide in ethanol production and demand. Nearly 3B gallons of US ethanol production has been taken offline. In the past week alone nearly 1B gallons of capacity has been cut basically reducing the corn grind by about 90M bu. a month. A big problem has been plants finding sufficient storage as consumption of gasoline has plummeted following the US Government stay at home orders. It is highly likely that we could see as much as a third of the industry shutter its doors by the middle of April. A move that would cause about 150M bu. per month loss for the grind.

Have a Safe Day!

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

March 27, 2020

Good Morning,

Markets were mixed overnight with corn down 2, soybeans up 3 and wheat up 11. It’s been a wild week in all markets and I doubt that it will be any different in the coming weeks as we continue in uncharted waters.
There are two ways to look at the market after this week’s trade: 1. The CBOT is up 3 on the week for corn and up 20 on the week for soybeans. 2. The markets are still so low that no one can make a profit with cash corn sub $3.20 and cash soybeans sub $8.20. Unfortunately #2 is the one that is the most important when it comes to cash flow, but the fact that we are up on the CBOT is encouraging given the difficult times we are in.
Traders are anxiously awaiting next Tuesdays USDA Stocks and Planting intentions report to see if there are going to be any reductions in the size of last years crop. Producers and traders have been arguing that the USDA missed the size of last years crop and that it is much smaller than reported. If the USDA doesn’t make any adjustments Tuesday, then the trade will have to move on with these numbers. If there is a reduction in stocks or for some reason projected acres, (currently estimated at 94 million) traders should actively take advantage of any rally to get old crop corn priced. If the markets were to rally on any drop in stocks, I believe it will be short lived as it will quickly be given back on a lack of ethanol demand.
Funds are currently short 95,000 corn and long 3,000 bean contracts.

Have a Safe Day!

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

March 26, 2020

Good Morning,

Markets are softer to start the day with corn and wheat down 2-3 and soybeans up 2.

Reuters released trade estimates yesterday for next Tuesday’s Planting Intentions and Quarterly Grain Stocks reports from USDA. The trade projects corn acreage to be 94.3M acres, soybean acreage at 84.9M acres, and wheat acreage just shy of 45M acres. Corn stocks are expected to fall 5.7% from March 2019 while soybean stocks are projected 17.8% lower than year ago. Both should be considered neutral/friendly

Valero announced that it was declaring force majeure at two of its plants (Albert City Iowa & Albion, Nebraska) that would allow them to not have to honor their producer price contracts for corn and DDGs made at both plants. Valero stated that all of its storage tanks are full and that it cannot continue operations.

Ethanol plants that are still running are seeing losses on the grind over $0.80 a bushel. This story will continue across the Midwest as the ethanol industry comes to grips with Americans who are driving less and a crude oil price war between Saudi Arabia and Russia.

The ethanol plant closures will certainly be problematic and make the uphill climb out of the basement here just that much more difficult for producers that are sitting on unpriced corn and a crop that will not store well. Add on the potential for a 94+ million acre crop that will be put in the ground in the next few weeks and things look bleak.

Have a Safe Day!

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

March 25, 2020

Good Morning,

Prices at the CBOT trading higher with corn up 3, beans up 1 and wheat up 4 cents. The US Dollar is down at 101.65 and crude oil is down $0.75 to $23.35.
The Trump administration struck a deal with Senate Democrats and Republicans on an historic rescue package that tees up more than $2 trillion in spending and tax breaks to bolster the hobbled U.S. economy and fund a nationwide effort to stem the coronavirus. The legislation was still being drafted but Senate Majority Leader McConnell said the Senate would vote on it Wednesday. It would still have to pass in the House before it gets to President Donald Trump’s desk.
For individuals the package provides direct payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child. Unemployment insurance would be extended to four months, the benefits would be bolstered by $600 weekly and eligibility would be expanded to cover more workers.
The coronavirus bill provides for $50B in funds to the CCC and directs the USDA to provide several avenues of relief to the American farmer including MFP payments and an aid program for US cattleman. Potential payment would likely dwarf last years payments as they essentially to farmers to “farm for the government.” Expectations are that the USDA will wait until after spring planting is complete before announcing any payments and how they will be distributed to avoid any distortions in planting intentions.
Cash markets will have to be watched closely today as China was reportedly inquiring about 250 TMT of US corn out of the Gulf. If the rumors are true it would push total Chinese purchases over the last week or so to 1.0 MMT and fulfill Beijing first allocation of duty-free import licenses.

Have a Safe Day!

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

March 23, 2020

Good Morning,

Markets are mostly higher as fears that US processing plants could close due to infections of the COVID-19 virus continues to rise. The infections could prove challenging as workers and truck drivers who potentially have contracted the disease cause a reduction in processing capacity. Most millers/processors have contingency plans they can put into place to keep plants running; however, many questions remain as to just how world supply chains and logistics will handle this situation as the spread of the virus continues to quicken.
Corn continues to struggle as the fall in crude oil prices weighs on ethanol demand. Besides the price war between the Russians and the Saudis, US ethanol will struggle with reduced domestic demand as American shelter in place and curtail their gasoline demand.
Beans are seeing strength after Chinese soy meal futures closed up the limit due to the tight supplies as livestock producers there restock their feed needs. Prices there are getting a boost from the policy that any vessel offloading soybeans must clear a 14-day quarantine in an effort to fight the spread of COVID-19. That’s not to say it all will come from the US as some 11 MMT of beans are in transit from Brazil and will arrive in the weeks ahead. Nevertheless, the restocking of the Chinese pipeline will be an important feature in any recovery in prices heading into planting season here in the US.

Have a Safe Day!

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

March 20, 2020

Good Morning,

Markets were higher overnight with short covering and news that China appears to have stepped up and bought corn, beans and wheat in the last 48 hours. Concerns over supply from South America have been fueled by the coronavirus outbreak in South America and weather concerns. This may lead to more long term support in the markets, but short term the virus and oil wars are going to lead the way.
Demand destruction caused by COVID-19 and a falling energy market due to overproduction in Saudi Arabia and Russia are having a major impact on demand. Research done by a private analyst suggests we could look for a 12% drop in demand for gasoline in March, a 40% drop in April and a 20% drop in May. That is over 8.6 billion gallons of demand for gasoline due to limited or postponed travel. That means a demand drop in ethanol equivalent to o 331 million bushel of corn in 2020! Ethanol plants are slowing down or shutting down daily across the country as demand disappears and margins fall to unseen levels.
Corn is unchanged, soybeans are up 9 and wheat is up 2 to start the day. There will be a lot of fluctuation as stories about the virus swing the markets back and forth.

Have a Safe Day!

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

Company Policy – COVID-19

To our Valued Producers,

Didion considers the health and safety of our employees, producers, and all business partners a top priority. We have implemented additional procedures to help prevent the spread of COVID-19. With that in mind, we need our partners in business to cooperate in eliminating the spread of the virus.

When delivering to Didion, ensure the following steps are followed:
1.) You are not sick with a contagious disease or virus.
2.) You have not been diagnosed with, been in close contact with a confirmed COVID-19 patient or travelled to an area with sustained ongoing community transmission
* of COVID-19 in the past 14 days
3.) Practice social distancing when necessary to interact with others.
4.) If physically possible, open your own hopper doors and tarp.
5.) Ensure equipment that is being shared with others is properly sanitized and handled.
6.) Use common sense hygiene practices.

In addition to the COVID-19 outbreak, it is also cold and flu season. To stay as healthy as possible, please remember take the basic protective measures (provided by the World Health Organization):

1.) Wash your hands frequently. Regularly and thoroughly clean your hands with an alcohol-based hand rub or wash them with soap and water.
2.) Maintain social distancing. Maintain at least six feet distance between yourself and anyone who is coughing or sneezing.
3.) Avoid touching eyes, nose, and mouth. Hands touch many surfaces and can pick up viruses. Once contaminated, hands can transfer the virus to your eyes, nose, or mouth. From there, the virus can enter your body and make you sick.
4.) Practice respiratory hygiene. Make sure you, and the people around you, follow good respiratory hygiene. This means covering your mouth and nose with your bent elbow or tissue when you cough or sneeze. Dispose of the tissue immediately and wash your hands afterward.
5.) If you have fever, cough, and difficulty breathing, seek medical care early. Stay home if you feel unwell. If you have a fever, cough, and difficulty breathing, seek medical attention with your primary care provider or urgent care center.

While the situation is constantly evolving, one thing remains certain: together, we will make it through this. As always, we truly appreciate our relationships with every farm. Please reach out with any questions and be sure to communicate with us on your marketing needs in this volatile time.

Thanks,
Garry Gard: 920-348-6844 (office) or 608-217-6592 (cell)
Mitch Giebel: 920-348-6861 (office) or 608-548-5479 (cell)