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

July 2, 2018

Good Morning,

 

My hope was that the end of June would mean better things to for the markets but the first trading day of July is not looking that way. Corn is down 7, soybeans down 12 and wheat is down 8 to start the month. During the month of June, corn was down 42 cents, Soybeans were down $1.54 and wheat lost 83 cents.

Fridays acreage and stocks report did very little to stop the bears with higher acres and quarterly stocks in corn reported. Corn acres jumped to 89.1 million which is a million more than the March report. There is talk that this number could increase when the final acreage comes in January. With acres at 89 million plus and a yield of 175 bpa and demand remaining unchanged we would be looking at a carryout of 1.6 billion bushel which would signal higher prices. Keeping demand at last years level with the current tariff talks will be very difficult. Traders will be closely monitoring any potential trade talks this week with Friday being the tariff implementation date set by the Chinese. The 25% tariff will keep the markets under pressure as we wait for updates.

Weekend rains west of the Mississippi with nearly all of Iowa and many parts of Nebraska and Southern Minnesota receiving modest rains eased the concerns of the hot weekend temperatures. Weather forecasts show temporary relief to start the week before a hot and muggy Fourth of July. Low 90’s are expected in most of the Midwest by the middle of the week with a cooler trend and less humid by the weekend.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

 

June 29, 2018

Good Morning,

 

Corn is up a couple cents this morning after yesterday’s selloff at the closing. As expected we saw traders add to their short positions in corn and soybeans as they prepare for today’s report. Today’s USDA report, warmer temperatures and month end positioning could make for some very volatile trade today. Funds were short 92,000 corn contracts after yesterdays close.

Reports out overnight that China will relax restrictions on foreign investment in some industries including auto, banks and agriculture is being viewed as a step toward resolution of the trade conflict.

The US Midwest weather forecast has no major changes as ridging with hot temperatures will occur next week. The 11-16 day forecast has the ridge moving out with some rains and slightly cooler temps.

 

Below are today’s estimates.

 

USDA Quarterly Stocks (billion bu)

USDA June 1, 2018 Ave. Estimate USDA June 1, 2017
Corn  5.306 5.268 5.229
Soybeans  1.222 1.225 .966
Wheat  1.100 1.090 1.181

 

 

USDA Prospective Plantings (million acres)

USDA June 1, 2018 Ave. Estimate USDA March, 2018
Corn  89.1 88.562 88.026
Soybeans  89.5 89.691 88.982
Wheat  47.8 47.124 47.339

 

 

Check back at 11:00am for todays numbers.

 

Have a Safe Weekend and Stay Cool!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

June 28, 2018

Good Morning,

Look for the markets to remain quiet today with the next USDA report coming out tomorrow at 11am and with no tariff news expected. Expectations for tomorrows reports appear bearish with estimates that both stocks on hand and acreage will be higher. If acreage is only slightly higher I would view it as neutral the markets. But if we get an acreage bump to 89.0 million or more and stocks at 5.3 billion bu. or higher, it could push the markets to new contract lows.
Weekly export sales of corn jumped this week to 33.5 million bu. which is back in line with the ten week average after only 6.5 million last week. Soybean sales were slightly higher at 13.2 million bu. New crop sales of both were strong with corn at 25.1 and soybeans at 23.6.
The numbers and trader reaction to tomorrow’s report are unknown, but regardless of how these numbers come out, we will struggle to move this market higher without some sort of positive trade news with China.

Producers should have firm offers in for old crop slightly above the current levels in case we would see the market initially move higher after tomorrows numbers are released. $3.40-3.50 range would be my target. New crop offers should be handled very similar with offers in the $3.50-3.60 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.

Have a Safe Day!

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