March 18, 2020

Good Morning,

Corn continues to grind lower while soybeans and wheat have stabilized. Corn is down 7 while soybeans and wheat are both up 4 to start the day.

Selloffs in commodities due to both the coronavirus pandemic and an ongoing trade war between Russia and Saudi Arabia is putting a squeeze on US ethanol producers; with gasoline futures now down to their lowest levels since they began being trading in 2005, ethanol producer margins are deeply in the red; much of this negativity is being driven by the crude oil price war between Saudi Arabia and Russia and that battle does not appear to be ending any time soon. Plants across the country are slowing down or shutting down and most are drastically widening basis levels due to the current margin levels.

There is talk that China may be looking for US soybeans, US fob soybean prices are now competitive vs Brazil. Soymeal could be supported by continued confusion over Argentina export situation. This week private estimates of Brazil and Argentina soybean crop were lowered due to dry weather.

Producers with old crop corn should be making sales and locking in current basis levels as this will continue to get worse with ethanol demand dropping sharply with severe restrictions on travel.

Have a Safe Day!

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

March 16, 2020

Good Morning,

Corn and soybeans are both trading 6 lower this morning while wheat is down 10. Crude is below $29/bbl and the Dow is 2300 to start the week.
The Federal Reserve also announced a buyback program of $200B of mortgage-backed securities and $500B in Treasury notes to prevent the coronavirus pandemic from leading the US into a recession. The Fed and other central banks have dramatically stepped up efforts to stabilize capital markets and liquidity, yet the moves have so far failed to boost sentiment or improve the rapidly deteriorating global economic outlook.
According to John Hopkins University total COVID-19 infections have now topped 169,000 with more than 6,500 deaths attributed to the disease around the world. Here in the US infections rose by nearly 3,800. The rise in US infections is to be expected to grow as the testing programs around the country are are just now ramping up. Last week’s announcement of the outbreak being reclassified as a pandemic has led to a massive economic slowdown across the US as schools close and companies reduce production, sending workers and students home to prevent the spread of the disease.
Producers that need cash flow in the next couple weeks should pull the trigger now and make the sales as there doesn’t appear to be an upside on the horizon. Producers that have grain in storage and are financially stable should still be moving grain to maintain quality in bins. Give us a call to find out what options we have for cash and deferred pricing of corn.

Have a Safe Day!

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

March 12, 2020

Good Morning,

The day is off to a very rough start after President Trump spoke in a prime-time address from the Oval Office, announcing sweeping new restrictions on travel from Europe and scattered executive actions to help workers and businesses rocked by what he labeled a “foreign virus.” The situation is evolving so quickly that even he misspoke when he was “suspending all travel” from Europe and suggested they would also apply to trade. The President later tweeted that trade wouldn’t be affected and the Department of Homeland Security clarified that the restriction applies generally to foreigners who’ve been in Europe within 14 days.
Unfortunately, grain and soy markets are following equity markets lower over worries that all of this turmoil surrounding this virus will slow the world Ag trade. South America continues to be an aggressive seller with Argentine corn offered about $0.18 under the US for April, but $0.41 under for July. Soymeal out of Brazil is being offered $25 less than shipments originating out of the Gulf. Adding further pressure are Russian wheat values that have fallen to new seasonal lows.

There is no way of knowing where or when this will end. Risk appetite has disappeared, dramatic (panic) action is being taken against Covid-19 creating panic and the impact on jobs and the world economy cannot be estimated – but it won’t be favorable. The virus will get worse before getting better. It will end sooner than later. People will eat. Grains will be sold. Grain will be moved. Crops will get planted. Animals will be fed. Foods will be made and consumers will continue to buy.

Producers that need cash flow in the next couple weeks should pull the trigger now and make the sales as there doesn’t appear to be an upside on the horizon. Producers that have grain in storage and are financially stable should still be moving grain to maintain quality in bins. Give us a call to find out what options we have for cash and deferred pricing of corn.

Have a Safe Day!

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

March 11, 2020

Good Morning,

There were few changes in yesterday’s WASDE report for corn and beans which was expected. Corn ending stocks came in at 1.892 which was unchanged from last month. Soybeans also came in unchanged from last month at 425 million bushels. The next major report from the USDA will be the Prospective Plantings report that will be released at 11am on March 31.
The number of coronavirus cases is now near 120,000 with the number of deaths over 4,300. The virus continues to spread around the World and continues to have significant financial impacts on everyone. Crude oil is down again today after a slight recovery on Tuesday following Monday’s big selloff. Crude is currently trading in the $30-33/bbl range with private analysts projecting $20/bbl in the coming weeks/months. The US Government is looking to take steps to head off massive deflation by cutting rates and the President is discussing tax cuts. The Fed is worried about the lack of spending by consumers and don’t want to see businesses failing.
Corn is down 2 and soybeans are up 2 to start the day.

Have a Safe Day!

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

March 9, 2020

Good Morning,

Markets are sharply lower this morning as they deal with spillover selling from crude oil that is off 10% and stock markets around the world that are under serious pressure.
The situation we are witnessing today seems to have no equal in oil market history. Crude oil crashed more than 30% after the breakup of the OPEC+ alliance triggered a dangerous all out price war as both Russia and Saudi Arabia vowed to flood the market with cheap oil. Crude futures are having to deal with their second largest decline on record in the opening seconds of trading in Asia, behind only the plunge during the Gulf War in 1991. The Saudi price cuts pressured prices to levels we haven’t seen since 2016.

The losses are not contained to Wall Street as markets from Europe to Asia posted losses of between 3 to over 6.5% as fund managers run for the exits as 16M people in northern Italy were put on mandatory quarantine in an effort to slow the spread of the COVID-19 virus across the region. The confirmed infections around the Globe virus has now topped 111,000 with deaths now approaching 3,900 worldwide. Cases in the US are pegged at 566 with 17 deaths attributed to the disease.

There are rumors that China did secure US Hard Red Spring wheat, DDGs and some sorghum, but the quantities are unknown. While a positive sign the purchases are not enough to alter the negative landscape across the markets caused by the COVID-19 outbreak. Worries are growing that we will see US Government intervention in effort to avoid clusters similar to what we are seeing in Italy where a third of the population is under quarantine as they try to slow the spread of the disease. Over 40 states have now confirmed cases of the COVID-19 virus and fears that the containment policies are beginning to fail.

Have a Safe Day!

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

March 6, 2020

Good Morning,

The Ag markets will have to contend with another risk off day as worries over the coronavirus grow along with concerns over a potential global recession. This had yields on 10-year and 30-year US bonds dropping to record lows as the expanding health crisis risks disrupting global supply chains. The latest leg of the sell-off kicked off in Asia where stock markets slumped more than 2% and then was followed by losses of up to 4% in Europe despite concerted efforts from central banks and governments to soften the blow from the virus.
With all the carnage we are seeing on Wall Street it is easy to forget that we need to be on the lookout for new demand from China. We have heard talk for a couple days and now we have confirmation over the wire that the Chinese are issuing their duty-free import licenses. The licenses are valid for 1 year and apply to all 696 goods that were subjected to Beijing’s retaliatory tariffs. This includes corn, beans, wheat, DDGs, ethanol and meat.
The Chinese purchases will be based on how competitive US Ag products are versus those originating out of other world exporters. We will likely have to contend with Brazilian soybeans, Argentine corn and wheat from several nations that are currently cheaper. This is where the slide in the US Dollar comes into play and could help to change the landscape back into the favor of the American farmer. My concern is that the money that the Chinese have spent to fight the virus and the time that has been lost is going to result in them coming up very short of the Phase One deal.

Have a Safe Day!

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

March 5, 2020

Good Morning,

Market is currently down three on corn and four on soybeans. Monday thru Wednesday we saw a rally back of close to twenty cents. With that being said, consider getting some sales on to reward the market move, or confirm offers with your buyer.

Secretary of Agriculture Sonny Perdue announced on Wednesday that he believes China will start buying soybeans in late spring and summer, as China has yet to be seen confirming their commitment to purchasing U.S. farm goods. Along the government theme, EPA is mulling ideas to help oil refiners with measures to comply with the ethanol blend rates.

Argentine farmers and exporters are showing warning signs of smaller soybean crops. This comes from an imposition of 33% tax for soybean and export for farms over 37,000 bushel production, this affects ¼ of their farmers who produce ¾ of the crop.

Make sure to call and talk about sales, we were recently reminded the market can take away twenty cents just as quick as we had it added back.

Have a Great Day!

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

March 3, 2020

Good Morning,

The markets found their lead in the stock market as the US Dow Industrial rallied 800-1000 points yesterday. The COVID19 dampened the market early as the US reported its second death from the disease. Both individuals who have passed from the disease have had compromised immune systems but the spread of the virus isn’t being taken any less lightly.
Markets are higher this am as traders expect some coordinated action to be announced after an emergency G-7 call this morning. Lack of news from this call would likely produce another sell off in the markets so be careful not to get too greedy on any nearby sales you need to make.

The averaging period is complete, and the corn price average used for insurance is $3.88,
soybeans $9.17, and Spring Wheat is $5.56. It’s interesting to note that the corn and soybean
prices logged in February for the RP Insurance program have a 76% correlation with the MY(marketing year) average price of the last 9 years, the Spring Average base price for RP has exceeded the average MY price received by farmers as recorded by the USDA. This is even more important when considering at least 15% of the corn/soybean/wheat bushels are uninsured under the RP program and open to risk to the producer. 2020’s corn support price is 12 cent lower than last year, and if that is a general indicator of the average price received in the coming MY, then average prices are going to be similar or lower to last year. The soybean average price is 37 cents lower than a year ago and despite the lower expected carryout the Feb average implies a lower average priced year.

Have a Safe Day!

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

February 28, 2020

Good Morning,

Prices over at the CBOT are trading lower again this morning with many traders happy to be turning the page on the calendar from February to March.
Panic around the Globe over more evidence that the coronavirus is spreading outside of China has investors diving for cover into safe-haven assets like Treasuries. There has been and will continue to be a major “Risk Off” attitude amongst traders for the weeks and months to come.
The South American weather models are basically unchanged from yesterday in calling for above normal rain for Brazil and arid weather for Argentina over the next 10 days. There is a chance for some showers in Argentina in the extended outlook, but at this point our confidence is low in the forecast. Yield losses will begin to mount if the pattern continues into late March. Central Brazil still looks wet with expectations for another 3″ to 5″ of rain over the week or so. Farmers in southern Brazil will welcome the drier weather there as the combines get rolling over the next 2 weeks. The forecast for Brazil looks favorable.
Current USDA S&D data shows ample supplies of corn and wheat available while bean supplies are getting tight. With so much grain still available it is tough to talk fund managers into stepping up to buy the grains. In my opinion the chances of China following thru on their phase 1 agreement to purchase $40 billion in ag products will not happen. The Coronavirus has resulted in them spending significant money to fight the disease and has reduced the timeframe for them to buy. This is going to keep prices in check and make any sort of rally into the spring very difficult to obtain.

Have a Safe Day!

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

February 25, 2020

Good Morning,

Monday’s big selloff in the markets was the sudden spread of coronavirus outside of China, particularly in South Korea, Japan, Italy and Iran. There are currently 53 known cases in the US.
Markets are trying to bounce back today but so far it has been a struggle with corn and soybeans only up 1 each while wheat is down 5. Traders and end users are reluctant to start any rally as the tears of the expanding outbreak continue to be a major driver that is linking traders around the world.
According to analysis by research firm Capital Economics, COVID-19 will cost the world economy over $280 billion in the first quarter of this year, meaning that global GDP will not grow from one quarter to the next for the first time since 2009. China’s growth is expected to slow to 4.5% over the same period. The slowdown may also undermine US plans to massively boost exports of ag goods, energy and services to China, hampering any potential recovery in farming communities. World supplies of grain are robust and South American corn and soybeans are now cheaper than those out of the Gulf.

Brazil continues to have great weather with rains continuing to increase the size of their crop. Crop progress remains strong and planting of Safrina corn crop is now close to 80% complete.

There are still some very good basis levels trading for corn delivery into the spring months. There is very little carry in the market which indicates that now is the time to be making cash sales. Commercial elevators are aggressively selling to end users due to the lack of carry which is covering demand and resulting in basis widening. Elevators with ground piles will begin picking them up in the next two months which will lead to a surplus of grain in the pipeline as well. I would advise producers to be locking in sales for any cash that is needed in the next 30 days. Basis for June and July are also advised while looking to lock in the cbot during planting season. New crop sales for this fall should be in place or made to get you to 20% sold.

Have a Safe Day!

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