August 23, 2019

Good Morning,

Markets are on the slide again this morning after China revealed its counter measures to the US tariffs expected to be implemented on September 1. Reports are that China will put 5% to 10% import tariffs on $75 billion in US goods coming into the country. The tariffs will be applied in two steps, matching the US tariffs implementation on September 1 and December 15. The total tariff list includes over 5000 goods coming from the US to China. China also said that is will resume additional tariffs on US auto and auto part imports, while indicating that crude oil is among the products that will face a 10% tariff.
Reports that President Trump will meet with the EPA and USDA office to talk about different options regarding ethanol and the exemptions to 31 oil companies that was proposed. The blow back in the industry has made the Trump administration look further into the impact this policy would make and possibly take a different course.
Pro farmer will release their US corn yield sometime later today. The tour found Iowa corn at 182.8 down from last years 188 bpa, and NASS estimate of 191 bpa. Minnesota corn was estimated at 170 bpa vs. NASS 173 bpa.
We may not agree with the USDA’s projections of the size of this years crops (acres and yield), due to prevent plant and late planted acres that will not meet historical yield potential but those numbers may be irrelevant. If no one can afford to purchase a product the lack of demand will keep prices from rallying. The law of supply and demand is at work and needs to be kept in mind by producers that are expecting a big move in the markets in the coming months. The lack of demand is and will keep prices from rallying unless there are some dramatic changes. The markets always end up at the level where supply and demand meet and as of right now that price appears to be lower.

Have a safe day!

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

August 22, 2019

Good Morning,

Corn is struggling to find its direction on the CBOT as traders continue to watch the Pro Farmer tour reports and news regarding the Biofuels industry. Lower projected yields continue to come from the tour which is not in line with the USDA’s numbers from last week. This is supportive to the markets, but is being met with reports of more and more ethanol plants slowing down or shutting down due to terrible margins. President Trump is set to meet with the USDA’s Perdue and the EPA’s Wheeler today to discuss potential options to support Biofuel producers.
The ProFarmer Tour pegged corn in Illinois at 171.1 bpa, down 10 bpa from the USDA’s August estimate. On the Iowa leg, corn yields in western part of the state were better than expected, but surveyors will still need to work their way through the eastern portion today before can get an accurate feel of just how ProFarmer’s estimates stack up against the USDA forecast for Iowa of 191 bpa.

It will be interesting to see just how ProFarmer ends up calculating their estimates when they release them during their final meeting Friday. The lack of muturity has been a big problem throughout the Tour, but in particular across the northern third of Illinois. Normally participants take more than 200 samples in order to help build their forecast; however, so much corn was planted in June and beans in July that they were only able to get just a fraction of the sample size they were expecting due to the lack of maturity.

Late yesterday a story broke about the USDA pulling all of its staff from the annual crop tour after an employee was threatened by an angry farmer. Frustrations have only grown over the past few weeks after this month’s WASDE crop report appeared to ignore the damage from this spring’s historic flooding. When you factor in all the additional stress placed on producers due to the trade war with China, falling farm income and tighter credit conditions, it is not tremendously surprising that farmers have begun to vent.

Have a Safe Day!

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

August 21, 2019

Good Morning,

Weakness in the markets yesterday as rains passed through Iowa, Illinois and Indiana with total rainfall much better than the models had predicted. The markets have opened lower this morning with corn down 1 and wheat down 3.
Prices are usually at their lowest of the season in corn and wheat going into the end of August. All the storage and dp contracts for corn and beans go off at the end of the month. The 31st of August, many times has marked the low price period for the year. The threat of an early frost or subpar yields appear to be the biggest thing producers are holding on to help move prices higher. Unfortunately basing your marketing on these two items may not be beneficial. End users have enough on the books for the first quarter, and there is no rush to further book grain. Prices also have a habit of holding back until crop insurance prices are set in October.
The Pro Farmer corn yields for Indian were 161.5 BPA, compared to 166 by NASS. Indiana soybean pod counts were 924 vs 1,312 last year. Nebraska corn yield was 172.5 vs NASS of 186. Nebraska pod counts were 1,210 vs 1,299 last year. We’ve thought that beans will be down in yield between 20 and 40 percent on most farms with short beans, late development and low pod counts.
Yesterday morning POET, the nations largest ethanol producer, announced that they will be making some operational changes due to market conditions.
1. POET Bio-refining – Cloverdale will idle production indefinitely.
2. Half of POET bio-refineries will run at reduced production rates
We have had reports of many other plants slowing or closing down due to poor
I would advise producers that are sitting on old bushels that need to move before harvest to lock in basis very soon. Once the calendar turns to September the gates will open regardless of cash prices as most producers and elevators will empty out their remaining stock to make room for this years crop. Producers needing to make new crop sales should consider making fall basis sales vs. the CH to give them a little more time to market once the crop is in the bin.

Have a Safe Day!

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

August 20, 2019

Good Morning,

A drop in crop condition ratings and early results from the ProFarmer Crop Tour had the markets higher overnight, but have since lost that strength. The corn market is currently down 4 with soybeans unchanged.
The tour reported 154 bpa for both S. Dakota and Ohio on their first leg. This was off 6 bpa for Ohio and 3 for SD from last week’s August forecast from NASS. Soybean pod counts disappointed as well with S. Dakota coming in at 833 versus 1024 last year and a 3-yr average of 965. Ohio’s pod count was off even more with just 764 pods versus 1248 last year. For some perspective, Ohio’s 3-yr average sits at 1137.
August is nearly over and maturity seems to be a major concern for the surveyors on both legs of the tour that may leave some farmers hoping for higher temperatures to try to help push these crop over the finish line. Today the tour will be checking fields in Iowa, Minnesota and Indiana as they work their way to middle and hold their meeting on Thursday to release their final yield estimates.
Unfortunately for producers with unsold old crop and unpriced new crop the biggest issue is demand! Regardless the size of this years crop, exports have been poor and domestic demand is diminishing daily with poor margins. Every week we hear of more ethanol plants that are slowing down or shutting down until things turn around. Unfortunately the turn around doesn’t look like it will be anytime soon!
I would advise producers that are sitting on old bushels that need to move before harvest to lock in basis very soon. Once the calendar turns to September the gates will open regardless of cash prices as most producers and elevators will empty out their remaining stock to make room for this years crop. Producers needing to make new crop sales should consider making fall basis sales vs. the CH to give them a little more time to market once the crop is in the bin.

Have a Safe Day!

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

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