August 21, 2018

Good Morning,

Crop conditions came in lower than analysts expected with corn at 68% good to excellent, and soybeans at 65% good to excellent. Bigger news of the ProFarmer Tour stated above average expectations for South Dakota and parts of Ohio with the first day completed. South Dakota estimated at 178 versus a three year average of 154 bpa. The final yield estimates will be releases at 1:30 on Friday.

Chinese trade negotiations are picking up again today thru Thursday. Nothing solid will come of this, but more ground work is being made. Beyond this, NAFTA continues to negotiate as well.

With crop tours projecting strong yields and great weather forecasts, not much is still standing between having a strong harvest come fall. With that being said we need to really look at options to move remaining old crop corn, whether being cash, basis, or other options. Please call to discuss what can be done.

Have a Great Day!

Mitch Giebel
920-348-6861
mgiebel@didionmilling.com

August 17, 2018

Good Morning,

Corn is currently trading up one, and soybeans down nine. This coming week brings the ProFarmer Tour, which will give real data from fields across the Corn Belt. Coverage will be well maintained after each day, as this is a great benchmark for what can be expected come fall. Both NAFTA and Chinese trade war talks are remaining positive, though nothing solid has come out yet.

Markets aren’t expecting any huge rallies, with the large crop expected, make sure to take advantage of small rallies like we saw yesterday. If you have old crop remaining, September corn is at $3.40 cash. Get offers in if you believe there will be a small rally or call today and ask about other specialty contracts we have to get the bins cleaned out.

Have a Great Day!

Mitch Giebel
920-348-6861
mgiebel@didionmilling.com

August 16, 2018

Good Morning,

Grain markets opened higher this morning with corn up 4 and soybeans up 17. Soybeans are getting support from news that broke last night that the Chinese are sending a delegation to Washington DC later this month to discuss a solution to the trade war. There are also talk that China has entered the bean market with rumors of 15 cargos bought last week and 12 cargos bought early this week for September. The majority of the soybeans are coming from Brazil with 1 cargo coming from Argentina. Weekly export sales released this morning show old corn at 13.3 million bu. and new corn at 41.1 million bu. New crop sales are the largest in the last ten weeks. Old crop soybean sales were 4.9 million and new crop beans were 21.0 million. New crop is slightly above the ten week average.
Ethanol production for the week averaged 1.072 million barrels per day which is down 2.55% from last week but up 1.23% from a year ago. Ethanol stocks are up 5.4% compared to a year ago with production up 2.34% while gasoline demand is down 1.22%. Report out today showed that agricultural export prices fell 5.3% in July from the previous month, which is the biggest drop since October 2011.

Today’s jump in the markets is great news, but producers need to keep in mind that these are just rumors of talks that will/may happen and there is no resolution. We also need to remember the size of the crop that is in the fields now is going to put a lot of pressure on the markets in about a month when harvest begins in the I states.

Have a Safe Day!

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

August 13, 2018

Good Morning,

The selling continues!! Corn is down 4 and soybeans are down 8 as last Friday’s WASDE reports continue to weigh on the markets. The report that was a copulation of producer and field sample surveys forecasted record yields in both corn and soybeans. Corn came in at 178.4 bpa and soybeans at 51.6 bpa. Higher production in both resulted in greater ending stocks, particularly soybeans where the stocks to use ratio jumped to 18.44%. Corn stocks to use ratio is currently projected at 11%. The current price of corn on the CBOT is the lowest price we have seen with the stocks to use ratio this low since the inception of the RFSII mandate. The 178.4 bpa appears to be strongly driven by higher population counts combined with kernel length counts. The remainder of the season will prove whether the USDA’s assumptions of test weight support the 178 number.
It was interesting to note that the majority of the increase in yield came from less than half of the major corn producing states. Crop problems in some states were more than offset by the following states:

Illinois = 20 bpa above trend
Indiana = 16 bpa above trend
Iowa = 12 bpa above trend
Nebraska = 12 bpa above trend

Despite the record yield projections in corn, the market in my opinion is still undervalued considering the stocks to use ratio. Historically a stocks to use ratio of 10-12% equates to a cbot price of $4. We are currently trading at $3.70 for the CZ18 contract. Is this underpriced due to tariff issues, or will we see the market come back to the $4 level without tariff resolutions is the question. I believe that without some tariff resolution, we will not see $4 on the CBOT prior to harvest.

Have a Safe Day!

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

August 10, 2018

Good Morning,

Markets were quiet overnight and should open the same this morning as traders await the 11am release of production estimates from the USDA. This will be the only news traded today and could set the tone for the coming weeks as harvest in the south begins to work its way north. Below are the estimates for today’s report. Be sure to check back at 11am for today’s numbers.

Production (Billion Bu)
USDA August 10 Average Estimate USDA July
Corn Production 14.586 14.411 14.23
Yield 178.4 176.2 174.0
Soybean Production 4.586 4.407 4.310
Yield 51.6 49.6 48.5

Ending Stocks (Billion Bu)
USDA August 10 Average Estimate USDA July
Corn 2.027 2.0210 2.0270
Soybeans .430 .460 .465

Have a Safe Day!

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

August 9, 2018

Good Morning,

Corn and soybeans are both slightly lower this morning with no excitement in the markets ahead of tomorrow’s USDA report. Traders appear willing to sit on their hands with most of their positions until they get confirmation of the USDA’s state by state surveys tomorrow. Producers need to keep in mind that tomorrows numbers are the first official survey of the summer row crops and often produces some serious volatility and surprising yields. The trade is anticipating record large yields, so anything below 176 bpa for corn and 50 bpa for soybeans could open the door to higher prices. Anything above these levels could mean that the highs are in and the market will trend back to the lows made in July.
Ethanol production in the week ending August 3rd was the second highest on record at 1.1 million barrels/day. Stocks were up from 923 million to 963 million gallons. This increase in stocks has resulted in margins in ethanol dropping dramatically this week.
Weekly export sales reported this morning showed old crop corn right on pace with the ten week average at 21.8 million bu. New crop export sales came in at 26 million bu. which is the lowest in the last 4 weeks, but ahead of the ten week average of 20.0 million. Corn exports are ahead of last year and the USDA’s projections for 2018 with only 4 weeks left in the marketing year. Soybeans are well below last year, but right on pace with the USDA’s projections for 2018.
My advice would be for all producers to look at making some cash sales ahead of Fridays report and look to lock in basis sales for new crop corn. (October forward) If we see the CBOT rally, we are guaranteed to see basis depreciate like it has the last two years with adequate carryout.

Have a Safe Day!

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

August 8, 2018

Good Morning,

Markets were steady overnight with corn up 1 and soybeans up 3 despite news of more sanctions against China. The US announced it will begin collecting 25% tariffs on an additional $16 billion in Chinese imports on Aug 23.
Traders appear content to remain neutral heading into Friday’s report where they will get a state by state estimate of this year’s crop. The average trade guess for yield is 176 bpa with a range of 171-180. Ending stocks are expected to rise from 1.552 billion to 1.636 billion bushels. The average trade guess for soybeans is 49.6 bpa with a range of 48-51.5. Ending stocks guesses average 638 million bushels up 58 from July.
New crop demand is where I am looking for the markets to get help. With lower corn production in South America and the Black Sea region, the US is going to have to cover the world’s production shortages. I believe soybeans will get their support from increased demand as importers come to the US for the cheapest beans on the market despite tariffs. The challenge in both commodities will be the timing of any market rally. Producers that are in need of cash flow or space constraints may not be able to capture any rally we may see. My advice would be for all producers to look at making some cash sales ahead of Fridays report and look to lock in basis sales for new crop corn. (October forward) If we see the CBOT rally, we are guaranteed to see basis depreciate like it has the last two years with adequate carryout.

Have a Safe Day!

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

August 7, 2018

Good Morning,

Issues with the world’s wheat crop in Russia, Canada and the EU has that commodity trading higher overnight. The wheat strength is not moving corn higher, but is giving it some support as corn trades unchanged this morning. Soybeans have bounced from yesterday’s losses and are trading 14 higher this am in response to yesterday’s crop conditions rating.
Yesterday’s crop conditions report showed corn drop 1% to 71% G/E compared to the five year average of 68%. Wisconsin came in unchanged at 81% G/E compared to the fiver year average of 74%. US soybeans dropped 3% to 67% G/E which is just above the 5 year average of 66%. Missouri continues to lead the trend lower with their corn crop rated 26% G/E and their soybeans at 34% G/E.
For those that say “we don’t matter” when it comes to production, but think the markets should be trading higher because of issues in Missouri here is something to consider: Missouri has ranked in the top ten for corn production just behind Wisconsin in 3 of the last 4 years.
Look for corn to trend sideways into Friday’s report when traders will find out how “BIG” the USDA is expecting this crop to be. Soybeans should remain steady to stronger headed into Friday provided we can avoid any news on the tariff front.

Have a Safe Day!

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

August 6, 2018

Good Morning,

On Friday private analyst Informa released its crop estimate for the US which came in at 176 bpa and a 14.392 billion bu. production for corn. This is 2 bu. less than FC Stone released on Wednesday, but 2 bu higher than the USDA has been using.

There was no new news in regards to the US and China negotiations over the weekend. Canada’s Foreign Minister did say he is keen on concluding NAFTA negotiations and is ready to talk at any time. The US and Mexico are expected to meet again this week to work on a resolution as well.
Tariffs are not the only issue that could be affecting soybean trade in the near future. China is likely to cut imports of soybeans by more than 10 million tons this year thanks to new soymeal technology and the use of supplements such as sunflower seeds and palm seeds. The use of low protein formula in animal feed could cut China’s annual demand for soymeal by 7% or 5 million tons of soybeans.

The market has been in a short term uptrend over the last couple weeks and we could see additional buying as traders position themselves ahead of Fridays report. The USDA will release its Supply and Demand and Crop Production report on Friday at 11am. This report will show their results of a state by state survey for yield and production on corn and soybeans.

Have a Safe Day!

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

August 3, 2018

Good Morning,

The US Midwest weather forecast had no major changes as close to average rains and no prolonged heat looks to continue. A front looks to bring rainfall to most areas of the Midwest thru the first half of next week. The 11-16 day forecast has mostly average to above average temps with average precip for the Midwest.
Informa will release its production/yield estimates this afternoon. Expectations are for their numbers to mirror FC Stones estimates which were released on Wednesday. Right now it appears the markets are trading a 176-178 bpa yield in corn and a 49-51 bpa in soybeans. Look for traders to start gearing up for next Fridays report early next week. The funds are currently short 133k corn and 65k soybean contracts.
Demand for corn has continued to be strong and if prices remain low, the export demand could bring carryout below 2 billion bushels even with a yield of 178. (view chart below).

18/19 USDA June est Projection #1 Projection #2 Projection #2
Planted Acres 89.1 89.1 89.1 89.1
Harvested Acres 81.8 81.8 81.8 81.8
Yield 174 178 183 185
Carry in 2027 2163 2163 2163
Production 14230 14569 14969 15133
Available 16307 16782 17182 17347
Feed Use 5425 5375 5375 5375
Industrial Use 7105 7105 7105 7105
Ethanol Use 5625 5625 5625 5625
Exports 2225 2400 2400 2400
Total Use 14755 14880 14880 14880
Carryout 1552 1902 2302 2467

In my opinion only a yield of 174 or less will move this market higher. The export estimates above in projection 1,2 and 3 are assuming that trade negotiations between the US and our partners gets worked out. China is preparing to retaliate in the escalating trade war on tariffs on about $60 billion worth of US goods. The import tax could range in rates of 5 to 25 percent. The implementation date of the taxation will be subject to the actions of the US. This statement came in response to yesterday’s news that President Trump would like to increase tariffs up to 25 percent.

Have a Safe Day!

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