July 20, 2018

Good Morning,

 

Nice rains falling across the state overnight and this morning that will maintain or increase the size of this years crop. Most of our producers have said that their corn has tasseled or will be in the next week. This rain along with favorable temperatures will ease any concerns that may have existed. Current weather and forecasts for the majority of the Midwest growing areas appears to be the same with Northern Missouri and a small area in Southern Iowa being the only major areas with moisture concern.(see map below)

President Trump continues to “poke the bear” as he said he is willing to impose $505 billion worth of tariffs on China if they continue to retaliate to his requests. This tariff would represent the total value of American imports from China. US trade officials have said that their main trade focus is getting NAFTA 2.0 completed by the end of the year.

While trade talks and tariffs with China are the main headline, there are several other countries with tariffs and trade issues with the US. Yesterday’s export sales report did show a cancellation of EU corn sales which is believed to be related to the 25% tariff on US imports. No one knows if or when these issues will get resolved. Regardless of the timeline, we should not expect an immediate rebound in the markets when things get worked out. Producers need to find a way to cover their operating costs with the current price structure.

 

Have a Safe Weekend!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

July 19, 2018

Good Morning,

 

The markets have moved sideways the last 3 days with trade war news and weather both uneventful this week. While there are no formal meetings scheduled between the US and China to discuss trade issues, the US and Mexican officials have agreed to expedite negotiations in order to reach a preliminary deal by late August.

Old crop weekly exports were better than last week in corn and soybeans but both were below their ten week average. New crop exports were strong with corn at 30.5 million bu. and soybeans at 22.5 million bu.

The US Midwest weather has rain and temperatures running slightly below average into the weekend which will aid in pollination and filling of kernels. The 11-16 day forecast has average temperatures and close to average rainfall for the Midwest.

I look for the markets to continue their sideways pattern as traders wait on any news from the political front and continue to monitor what effects the recent heat wave may have had on the crop size.

 

Producers looking to move old crop and clean out their bins before the 2018 crop starts to come off should give us a call to discuss some special options that we have for you.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

July 17, 2018

Good Morning,

 

Slightly higher markets overnight as we saw some short covering in corn and soybeans from yesterday spill over into the night session. Slightly lower crop ratings may move the market a little higher when we open this morning, but the ratings are still historically high so any long term moves are doubtful.

Corn came in at 72% G/E for the US compared to 64% last year and a 5 year average of 70%. Wisconsin came in at 82% G/E compared to 75% for the five year average. Soybeans came in at 69% G/E for the US compared to 61% last year and a five year average of 67%.

The US has filed claims with the WTO against China, the EU, Canada, Mexico and Turkey after those countries filed complaints about the Presidents steel and aluminum tariffs. There is some talk that US and China may be talking about trade issues. New $200 billion dollar tariff is due in early September. There may be dialog to resolve issues before then compared to talks last week that China would not meet until after the midterm elections. Some also feel that US soybean export prices are 23% below Brazil and have almost priced in the current 25% tariffs. Unfortunately this is not something that is going to move prices higher for US producers.

Producers looking to move old crop and clean out their bins before the 2018 crop starts to come off should give us a call to discuss some special options that we have for you.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

July 16, 2018

Good Morning,

 

Last week saw fund selling pound the markets lower with both speculators and index funds as big sellers. Hedge funds were sellers for the 7th consecutive week. Their position has gone from 216,000 contracts long to 73,000 contracts short. In that span we saw corn go from $4 to $3.40.  Thursdays USDA report did little to move the markets despite giving us bullish news with lower stocks in the 2017-18 and 2018-19 crops.

Fundamentally the corn markets remain undervalued by at least 30 cents in my opinion. But rainfall amounts from 1-3 inches fell in areas of Kansas, Illinois, Eastern Iowa and Southern Wisconsin. Showers and moderate temperatures are expected in much of the Midwest during the next two weeks which will be ideal for pollination.

With no major reports to be released until the August 10th S&D report I would expect weather to be the main market mover for the next couple weeks. The next USDA report historically comes with yield adjustments as they will give state by state forecasts.

 

Producers looking to move old crop and clean out their bins before the 2018 crop starts to come off should give us a call to discuss some special options that we have for you.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

July 12, 2018

Good Morning,

 

USDA Supply and Demand report out at 11am this morning. The average corn yield estimate of 174.9 bu/acre may be low given how good the Good/Excellent ratings have been recently (10% higher than last year). Despite the great ratings I would expect the government to be conservative in this report and make bigger adjustments in the August report when we get a state by state breakdown. Today’s estimates are attached below.

Weekly exports were soft again for the week ending 7/5/18 with corn at 15.8 million bu.(13 million below the 10 week average) Soybeans were the worst in the last 8 weeks at 4.7 million bu.(6 million below the 10 week average). I do not see last week’s lower export numbers as a big surprise as it was a shortened week due to the 4th of July. I would also expect we will see these numbers continue to be low as we near the end of the old crop marketing season. New crop sales for both corn and beans were below their 10 week average, but as US prices continue to fall we are becoming much more competitive in the world market despite the tariffs.(review my commentary from Monday)

Despite the dry weather locally, the US drought monitor has gotten better for the upper Midwest over the last week while areas in Missouri and Kansas have gotten worse.

 

Billion Bushels

July 12th Estimates June Report
Corn
US Stocks 2017-18 2.027 2.107 2.102
US Stocks 2018-19 1.552 1.712 1.577
Soybeans
US Stocks 2017-18 .465 .507 .505
US Stocks 2018-19 .580 .471 .385

 

 

 

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

July 11, 2018

Good Morning,

 

The Trump administration raised the stakes in its trade war with China yesterday saying it would slap 10% tariffs on an extra $200 billion worth of Chinese imports by August 30th. Last week the US imposed 25% tariffs on $34 billion of Chinese goods to which the Chinese responded with matching tariffs on the same amount of US goods. The new tariffs announced yesterday targets more consumer goods than those covered under the tariffs imposed last week. President Trump has continued to state that he will take care of the US farmer, but this may take a while and several operations may suffer at the expense of the long term goal.

The USDA will release their monthly supply and demand numbers tomorrow at 11am. Expectations are for corn and soybean stocks in the 17-18 and 18-19 year to increase. Below are the trade estimates.

 

Billion Bushels

  June Report July 12th Estimate
Corn    
US Stocks 2017-18 2.102 2.107
US Stocks 2018-19 1.577 1.712
     
Soybeans    
US Stocks 2017-18 .505 .507
US Stocks 2018-19 .385 .471

 

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

 

July 10, 2018

Good Morning,

 

The corn market gave back Friday’s gains and then some over the last 24 hours.  We are down 15 cents in corn over the last two days and down 22 in soybeans in that same timeframe. This type of trade is why I believe producers should have firm offers in place to take advantage of any technical rallies that the markets may give us.

The markets will likely trader lower as traders begin to look towards Thursdays WASDE report and extended range forecasts that call for temperatures to moderate in the latter half of July.

Traders will continue to bearish the market until we see US and Chinese negotiators sit down for meaningful talks which there appears to be no solid timeline on.

Yesterday afternoons crop ratings showed US corn at 75% Good/Excellent compared to the five year average of 70%. This is 10% better than last year. Wisconsin came in at 83% Good/Excellent which compares to 75% on the five year average and 69% last year. The only states coming in below their five year average were Missouri and Kansas. Soybean conditions came in at 71% Good/Excellent for the US compared to 67% on the five year average. Wisconsin soybeans came in at 81% Good/Excellent.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

July 9, 2018

Good Morning,

 

We finally saw some strength in the markets on Friday with corn up 8 and beans up 37. 25% tariffs on $34 billion of Chinese imports took effect Friday as well as retaliatory tariffs from China (which included soybeans). China cancelled about 370k metric tons of soybeans this morning (which equates to about 10-11 million bushels), but the old adage “sell the rumor, buy the fact” held true and lent itself to commodity strength to end the week.

Now that the tariffs are in place traders are watching to see what happens next. Will we see negotiations increase or will more tariffs be slapped on. So far, it is unclear how China intends on meeting its protein feed needs without eventually buying beans from the US. Brazilian beans continue to be offered at around a 17% premium to US beans. Prices for October out of Brazil are already trading at a 20% premium to those out of the Gulf, suggesting we are quickly closing in on the level where shipments can still work even with the 25% tariff in place. Regardless, other countries have taken advantage of the price discrepancy and bought US beans on the way down leading to weekly export sales that came in larger than expected.

Weather looks to be warm and dry this week with cooler and wetter conditions forecasted for next week across the corn belt.

The markets have opened 6 lower in corn and 16 lower in soybeans indicating that Friday’s short covering may have been overdone.

This could be a very volatile week with crop progress out this afternoon and the USDA’s Supply and Demand report released on Thursday.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

July 5, 2018

Good Morning,

 

The markets will open at 8:30 am this morning after a shortened trade on Tuesday and 4th of July holiday. Some look for a higher corn and wheat open due to ongoing talk of lower World 2018/19 supplies. Still the dominate factor is the trade wars with US and China, EU, Canada and Mexico. Deadlines for US tariffs on China are tomorrow. China has said they will retaliate immediately with tariffs of their own if this is not resolved. This could offer resistance to grains especially soybeans.

 

North Dakota, South Dakota, Minnesota and parts of Iowa saw rains yesterday. Precipitation appears to be light for the next 7-10 days across the major growing regions while temperatures are expected to moderate with highs mainly in the 80’s. The chances of any premiums being added to the markets from weather are becoming unlikely this late in the game.

 

Producers should have firm offers in for old crop slightly above the current levels. $3.30-3.40 range would be my target. New crop offers should be handled very similar with offers in the $3.40-3.50 range for fall delivery. I would not recommend any sales for next spring and summer at this time in hopes that our political issues can be resolved by that time. Over the last 10 years, 90% of the time the December futures have traded higher than the current level. Over the last 5 years it has traded higher 84% of the time.  I feel that fundamentally we are trading 25-30 cents below where the market should be due to trade wars.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

July 3, 2018

Good Morning,

 

Corn is trading higher this morning on this Holiday shortened week as the bears look to cover some short positions ahead of the 4th of July. The markets will close at 12 today and not open until 8:30 am on Thursday.

Fridays deadline for the implementation of the $38 billion of tariffs between the US and China continue to hang over the markets. At this point everyone is assuming the worst and is hoping for the best as traders expect the tariffs will go into effect as planned on the 6th. This morning President Trump tweeted out the following:

“The economy is doing perhaps better than ever before, and that’s prior to fixing some of the worst and most unfair Trade Deals ever made by any country. In any event, they are coming along very well. Most countries agree that they must be changed, but nobody ever asked!”

This appears rather upbeat considering the looming trade war and the negative impact it has had thus far on the Ag sector.

 

Yesterday’s crop conditions report showed corn down 1% to 76% G/E. Soybeans were down 2% on the G/E rating to 71%. Most of the drop in ratings was attributed to regional heat and dryness last week.

 

Have a Happy and Safe 4th of July!

 

Garry Gard

920-348-6844

ggard@didionmilling.com