July 26, 2018

July 26, 2018

Good Morning,

Prices on the CBOT are trading higher after President Trump and EU Commission President agreed to hold off on any new tariffs. However, it was the comment from Mr. Trump that the EU had agreed to “buy a lot of soybeans” that has the bean shorts running for the exits. No one really knows what “a lot of soybeans” means in terms of actual numbers, but the trade definitely viewed the news as bullish as the beans gapped higher and rallied to sharp gains. Corn has followed suit gapping higher, as well, with wheat also trading higher.
The comments from the President were a welcome change and have helped to breathe new life back into the markets. This news makes perfect economic sense for the EU with new crop soybeans out of the Gulf being offered at a $2 per bu. discount to Brazil. Rest assured the EU and everyone else will buy almost every soybean they need from the US so as long as the trade war between the US and China continues.
The EU and GFS models are back in good agreement on the 10-day outlook in calling for a broad ridge/trough pattern to continue through the first week of August. The pattern is expected to bring seasonally cool temps and below normal rainfall to the N. Midwest.

Producers with old crop corn and soybeans to move should take advantage of this news and rally by making sales!

Have a Safe Day!

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

July 25, 2018

Good Morning,

The corn market is trying to rebound from yesterday’s profit taking with nearby futures up 5 and deferred up 3-4.
USDA Ag Sec Perdue announced the agency is authorized up to $12 billion in programs to assist US farmers disrupted by tariffs. The program is expected to begin around Labor Day; USDA stresses this is a short-term program until trade deal can be made. USDA will use 3 programs to assist farmers; 1) Market Facilitation Program, authorized under the CCC and administered by FSA, will provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs; this is direct payment to producer, after they’ve sign-up with local FSA county office. 2) Food Purchase and Distribution Program through Agricultural Marketing Service to purchase unexpected surplus of affected commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and nutritional programs. 3) Trade Promotion Program administered by Foreign Agriculture Service to assist in developing new export markets for farm products. Press conference revealed that soybeans would be largest recipient of program $. Unfortunately the financial break-down, the duration, & how each program is administered is not available yet. This is not a sustainable long term solution, but will buy producers time as the US and China try to work out their differences.
The EU and GFS models are in fair agreement over the 10-day forecast as they call for a broad ridge/trough pattern to continue across N. America into the beginning of August. The weather pattern is expected to bring cooler temperatures and below normal rainfall. Areas of acute dryness continue to pop up throughout the Corn Belt that will be a drag on corn and bean yields. The latest Vegetative Health Index maps showed marked improvement as they now point to yield potential closer to 176 to 178 bushels per acre as a nationwide average. With each passing day now it looks as though the 2018 corn crop will be a good, but not a great and with what is going on with wheat the corn will surely follow.
Producers with old crop corn and soybeans to move should take advantage of this short rally to make sales. The announcement has done nothing to change the supply and demand picture for the time being and if/when it does, it will only affect new crop.

Have a Safe Day!

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

July 24, 2018

Good Morning,

Corn ratings came in unchanged yesterday afternoon for the US at 72% G/E. Silking was 81% vs the 5 year average of 62% and dough stage was also ahead of normal at 18% compared to 8% for the 5 year average. Wisconsin was rated at 83% G/E which is up 1% from last week. Silking in WI was 53% vs the 5 year average of 35% while dough was unrated. We are too late in the season for crop ratings to deteriorate enough to move the market higher. This weeks report has traders anticipating not only a larger harvest, but an earlier one as well. The rapid maturity of this crop is most likely going to keep any late season market rally at a minimum.
Other morning highlights:
• The new EPA administrator, Andrew Wheeler, will make an announcement today concerning sorghum in the RFS
• The USDA announced a cancellation of 165 mt sale of soyobeans to China
• Weather was favorable across all Crop Watch 2018 fields last week with some rain showers and milder temperatures, and some of the corn and soybeans are already responding to the better growing conditions.

After closing higher for the previous 6 sessions, corn looks to reverse direction today with the markets down 6 on the open.

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 special options that we have for you.

Have a Safe Day!

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

July 23, 2018

Good Morning,

Favorable rains locally over the weekend have the crops looking very good in our area as we work thru the crucial pollination and development stage. The extended 6-10 day and 8-14 day forecast looks drier with temps above normal for the Corn Belt. The driest areas could be the Dakotas, MN, WI and northern IL.
Friday’s cattle on feed report showed 11.3 million head in large feedlots, the largest number since records started in 1996. This is 4% more than a year ago. June placements came in at 101.3% of last year while marketing’s came in 100.9% of last year.

The markets are slightly higher this morning with corn up 1 and soybeans up 3. Will the funds start buying in an attempt to extend last week’s rally in the markets? Demand remains strong, but political pressure will keep the markets in check for some time. This afternoon’s crop conditions report should show a slight decline in crop conditions, but traders will likely wait for the USDA’s August production forecast before confirming a bottom is in place.

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 special options that we have for you.

Have a Safe Day!

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

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