June 12, 2020

Good Morning,

Yesterday’s crop report showed very limited changes on the balance sheet. The USDA lowered 2019 production by 46 million bushels, and took out 50 million bushels of ethanol demand, making for a net change into new crop of 5 million bushels higher.

Soybean changes were also pretty minimal on the report. The USDA raised the crush 15 million bushels to a record 2,140 million bushels. Exports were lowered by 25 million bushels for a net increase in old crop stocks of 5 million bushels at 585 mil bu. New crop stocks were very close to trade expectations at 395 million bushels, with the USDA increasing the crush by 15 million bushels.

Look for mixed trade today, and with improved chances of rain coming, I don’t the market trying to rally today or anytime soon. My guess, we chop back into the middle of the range again, and the market fails at the end of the session. There is plenty of weather ahead, but today the forecast is bearish.

Have a Safe Weekend!

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

June 11, 2020

June 11, 2020

Good Morning,

Corn is up 2 while soybeans and wheat are down 2 to ahead of today’s WASDE report that will be released at 11am central time. Estimates are listed below.

2019/20 US Carryout (billion bu.)
USDA June Ave. Est. USDA May
Corn 2.103 2.150 2.098
Soybeans .585 .577 .580
Wheat .983 .979 .978

2020/21 US Carryout (billion bu.)
USDA June Ave. Est. USDA May
Corn 3.323 3.360 3.318
Soybeans .395 .426 .405
Wheat .925 .897 .909

Check back after 11am to today’s numbers.

Have a Safe Day!

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

June 10, 2020

Good Morning,

Markets are mixed this morning with corn down 3 while soybeans and wheat are up 2. Yesterday’s selloff in corn and soybeans was a result of Mondays planting progress and crop conditions report that has traders preparing for large carryouts this year. This will continue to be the story if weather continues to cooperate in the growing region. The past couple days moisture maps show that the tropical storm has been dumping adequate rain with limited areas receiving excessive amounts. Extended forecasts call for 10-14 days of warmer and drier weather followed by more moderate temperatures and rain.
Traders will await tomorrows report and continue to monitor weather updates here and overseas. The expectations for tomorrows report are for slightly increased old crop corn stocks with soybeans and wheat unchanged. I do not expect any changes in the new crop ending stocks as they will wait until the July WASDE to update those numbers to incorporate the June 30th acreage numbers. I also look for the June 30th report to carry more weight and volatility than we typically see.
In a statement yesterday, Goldman Sachs stated they believe commodity prices are too high. They don’t believe current corn and crude prices are sustainable with the loss of global demand and the massive oversupply in the corn market. They forecast corn prices to drop by 7.4% (.25 cents) in the next quarter which would put futures prices at $3.00 for the July contract and $3.15 for the December contract.

Be sure to get some sales made and offers in with your buyers soon!

Have a Great Day!

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

June 9, 2020

Good Morning,

Markets are lower this morning with corn and soybeans down 3 and wheat down 5.
Last night’s planting and crop progress report showed the US corn crop 97% planted and 75% in good to excellent condition. Soybean planting progress came in at 86% planted with 72% of the crop rated in the good to excellent category. Some areas of IL and IN that received heavy rains in May are busy replanting and experiencing erratic stands that will be interesting to watch conditions on over the rest of the summer. Unfortunately these areas are too small to have a bullish impact on the market. With old crop corn carryouts expected to be in the 2.1-2.3 billion bushel range in Thursdays report and this years crop off to a great start for the majority of the US prices will struggle.
The funds have been short over 200,000 contracts for close to a month now as they closed yesterday with an estimated 266,000 short position. Some traders believe we will see some short covering in the coming weeks to set up another selling pattern after we get into mid-July to early August. I do not look for that short covering position unless we get a weather issue in the next couple weeks. I look for the funds to hold on to their short position well thru new crop.
Traders will be monitoring rain totals this week from the Tropical storm that is moving thru the central US. After this remain event there is almost no rain in the forecast for the next 15 days with warmer temperatures. This looks to be ideal for growing conditions.

Producers should be making sales of old and new crop corn ahead of Thursdays report and should be making plans to have significant sales on ahead of the July 4th weekend.

Have a Safe Day!

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

June 8, 2020

Good Morning,

Soybeans and wheat are down two while corn is up 2 this morning.
Corn has made small gains in the past few days, but it’s mostly just been a change in the spread and the position the funds hold. The funds will likely remain short corn unless the weather changes, just not as heavy. Ethanol production is picking up and crude oil has traded to 40 dollars a barrel. Prices don’t need to be at 3.20 vs July, but it’s up the funds at this point.
China’s soybean imports were 9.4 mmts for May, up 2 mmts from last may at 7.4 mmts. China is expected to buy similar amounts in June and July, with much coming from the US. The demand picture for beans is pretty good, as this is the most beans China has ever taking in this time period.
Crop ratings will be out later today, and they are expect to increase again. Corn should come in close to 75% good/excellent and beans should be 72% good/excellent. The USDA should also say that most all of the crop is planted as well. The crop survey on acres for June may actually have a chance of being half right for once due to the weather we have had this spring.
Look for the markets to continue to trade sideways this week heading into the USDA report on Thursday. Thursdays S&D report is not expected to help the markets. If the Funds reduce any of their short position ahead of this report, producers should take advantage of the market gains and make sales of old and new crop corn!

Have a Safe Day!

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

June 5, 2020

Good Morning,

Markets are slightly higher this morning with corn and soybeans both trading 1 higher.
Short covering may be the market mover to close out the week. I doubt the rally will go very far, but any rally is good news. Corn will have a tough time clearing initially 3.30 and then even more difficult at 3.35 ahead of the crop report that is next Thursday. The market has made a habit of dousing out the corn short covering before the crop report is released. The report next week will be bearish to corn again, with the absence of high ethanol use over the past month.
The weather is going to clear of rain until Tropical storm Cristobal makes landfall on Sunday. Rains will develop in New Orleans of up to 5 inches before moving up Monday and Tuesday into the Central US. Today’s model shows most of the rain covering from south of Kansas City, strait up to Des Moines and directed to Green Bay. The East looks to get less than an inch, where the west central belt can get as much as 2-3 inches, with isolated areas of 5 inches.

The temperature forecast looks a lot warmer for the next 14 days. Temps break down with the tropical storm moving in, but they slowly build back warmer on June 16-18th. This may be the beginning of another high pressure ridge.

Look for prices to remain depressed and trading in the 10-15 cent range we have seen over the last month. Producers should be actively selling cash and new crop corn in the $3-$3.20 range when/if it is obtainable. In my opinion we have 3 weeks for weather to move the markets higher. If we don’t see any major weather issues by the 4th of July the window will close and prices will start to head lower.

Have a Safe Day!

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

June 3, 2020

Good Morning,

Corn is down 2 while soybeans and wheat are both trading 3-5 higher overnight. Favorable weather nearby and in the extended forecasts continue to keep the funds short the corn board. Funds are estimated to be short 275,000 contracts. Money has been flowing into the equity sector but they are reluctant to invest in commodities until they see better evidence of demand. Right now Crude oil appears to be the best investment in the eyes of investors. With the USDA’s forecast of 3.3 billion bushels of surplus stocks in the next year, it is going to take a major event to change everyones thoughts.
Traders will begin to focus on next week’s WASDE report which could offer additional changes in demand but isn’t likely to see any major alterations. Ethanol production has increased, but unless it rises dramatically in the coming weeks the USDA’s current estimate will have to come down by 100 mb.
Look for prices to remain depressed and trading in the 10-15 cent range we have seen over the last month. Producers should be actively selling cash and new crop corn in the $3-$3.20 range when/if it is obtainable. In my opinion we have just over 3 weeks for weather to move the markets higher. If we don’t see weather issues by the 4th of July weekend the window will close fast.

Have a Safe Day!

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

June 1, 2020

Good Morning,

Overnight the markets were sharply lower with corn, soybeans and wheat all down 6-7 cents. This morning corn opened 5 lower while soybeans and wheat were 3 and 8 lower respectively.

President Trump announced significant sanctions on China Friday afternoon. The president formally withdrew U.S. membership, and therefore funding, from the World Health Organization for its role in helping China cover up the risks associated with the coronavirus. He formally removed “special status” for Hong Kong, which allowed both U.S. companies and the U.S. government to do business in Hong Kong as if it were a separate entity from China. That will have a notable adverse economic impact on both Hong Kong and on China. The president also called for increased scrutiny of Chinese companies doing business in our financial markets. This, combined with previous sanctions on government retirement accounts investing in Chinese businesses, is just the beginning of what he can do to control capital flowing into China.
Reports out of China are that the state buyers have been told to halt purchases of US pork and soybeans. These two commodities are what China has been buying the largest volumes of in recent months. China can manage short term on existing supplies and shipments that are on their way from Brazil, but will be back in the market later this summer when that supply dries up.
Favorable weather across the Midwest over the weekend and forecasts for the 7-10 day will keep weather from adding any life to the markets.
Continue to make sales on any small rally and take advantage of $3 cash and new crop sales when available. If we don’t see weather move this market in the next 4 weeks, we may very well be out of opportunity for the bulls. Historically we do not see weather rallies in the market after the 4th of July.

Have a Safe Day!

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

May 28, 2020

Good morning,

Markets are mixed this morning with corn up 1 and soybeans down 7. Weather and US-China tensions lead the news today.
China advanced its law restricting the freedoms of Hong Kong today, taking the action despite threats for sanctions from the United States. Negotiations with China are most effective when done within the context of relationship. It’s a part of their culture. President Trump was very effective at developing and maintaining a relationship of respect with President Xi Jinping through the tensions of the trade negotiations, even in the rocky times of that process. That respect allowed the negotiations to continue. But that relationship is being tested currently and stretched thin to the point of breaking as President Trump has lost patience with the Chinese leadership’s poor handling of the coronavirus that allowed it to rapidly spread to the rest of the world, and now its aggressive stance on Hong Kong, on top of its spread of military might in the South China Sea while saying it was not doing so. China moved forward with tough restrictions on Hong Kong and the world now waits for President Trump’s response, which is expected to elicit another response from Xi. (seems like a soap opera)
Weather remains favorable for most of the Midwest over the next couple weeks with warm temps and adequate rainfall. Locally things could not be much more ideal with humid temps and rainfall the last few days the crop is popping out of the ground at a fast pace. I have not heard of any emergence issues from any producers in our draw area.

Have a Safe Day!

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

May 22, 2020

Good Morning,

Overnight corn and soybeans were each down 1-2 cents while wheat was down 9. Look for traders to close the week on a down note today as they head into a 3 day weekend with favorable good planting progress, favorable growing weather and continued Chinese-US tensions.
Basis levels have narrowed across the country as more ethanol plants come back on line with margins improving in the last couple weeks. Farmer selling across the country has been steady despite the low prices as producers continue to need cash flow and monitor their bins. I have heard some talk of producers possibly sitting on grain going into late summer in hopes of higher prices and using the government payments to meet their cash needs. While this may be an option it is not one I would suggest for multiple reasons.
1. The 2019 crop is poor quality with lighter test weight, higher foreign material and higher damage. This all translates to difficulties storing and preventing things going bad in the bin.
2. With a big crop on the horizon, storage will be at a premium this fall with farmers rushing to make space in late August and September ahead of the new crop. This will depress basis levels on top of CBOT prices that will falter as new crop in the south hits the pipeline.
3. The IL river is essentially closed due to flooding which is limiting the loading of barges. This will make it difficult to get all the grain down the river before it closes for work on its lock and dam system in July. These bushels will fill any local markets and work their way north which will depress basis levels.
4. With projections of a 3 + billion bushel carryout next year does anyone expect CBOT prices to rally between now and harvest? In all of my conversations with producers, end users, traders and market experts, no one has a reason for the market to rally for old or new crop.
Producers should take advantage of markets that are currently buying corn at the $3.00 range, add on the .335 cents you will receive from the government and consider $3.335 a great sale. (There may be other state or federal payments that can be added on top of this at a later date) I would also suggest producers lock in some new crop sales at the $3.00 level as this may be as good as it gets. I would not be surprised if the government comes out with a payment for new crop somewhere down the line that would add some premium on top of this making it a good sale.

Reminder that there will be no markets on Monday.

Have a Safe Memorial Day Weekend!

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