May 21, 2020

Good Morning,

Markets are quiet to start the day with corn and soybeans unchanged.

Weekly export sales came in below the 10 week average for corn at 34.8 million bushel compared to 47.1 on the ten week average. Soybeans were stronger and the best in the last 10 weeks at 44.3 million bushels as we continue to see Chinese sales ramp up.

The USDA’s CFAP announcement has generated as many questions as answers regarding payment, qualifying production, and qualified inventories. The FSA is trying to catch up with training to get the answers needed on a granular level that are so important. According to the announcement producers will be paid based on inventory subject to price risk held as of January 15, 2020. A single payment will be made based on 50% of a producers 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by 50% and then multiplied by the commodity’s applicable payment rate. (Corn rates are .32/bu for the CARES Act and .35/bu for the CCC payment, soybean rates are .45/bu for CARES Act and .50/bu for the CCC payment) This means that producers will receive $.335 per bushel of corn that they had price risk on as of January 15th and $.475 per bushel of soybeans that they had price risk on as of January 15th. The big question that is still trying to be clarified is what qualifies as “price risk”? In early conversations with county agents, here is my understanding of what would be considered to have price risk:
1. Any bushels that you had stored on farm or in an elevator that had no contract in place for those bushels.
2. Any bushels that you had stored on farm or in an elevator that had an open component on the contract.
A. Example – If you had a basis contract in place for June delivery of corn that you had stored on farm or in elevator, but had not set the futures price on it yet.
B. Example – If you had a HTA(Fixed Futures) contract in place for June delivery of corn that you had stored on farm or in elevator, but had not set the basis on it yet.
3. In the examples above, June delivery is just used as an example. As long as the contracts were not priced as of January 15th, you could have delivery anytime after that.
4. The only bushels that would not qualify for payment would be bushels that you had been paid on or had set a price on prior to January 15th.
A. Example – If you had a contract in place for June delivery of corn and the basis and futures price had been established.
5. APPLICATIONS are not being taken until MAY 26, 2020.

** The above explanations are only my interpretations based on information I have read and discussed with certain officials. You should talk with your local FSA official before counting your $. Keep in mind this information is all new so there is a learning curve for your local agent, give them time to get trained***

We will be happy to help you with documentation needed to apply for this payment, but ask that you confirm with your local FSA agent to get details of exactly what you need to make everyones time more efficient.

Have a Safe Day!

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

May 19, 2020

Good Morning,

The markets are off to a positive start this morning with corn and wheat up 2 while beans remain unchanged. While the news of people starting to come back out of their lock downs and resume a portion of what their pre-virus lives were helps the economy and markets, it’s a long way from where we were. We will most likely never see the pre-virus days again when it comes to socializing, travel patterns, business operations, etc. Everyone will move at a different pace so we must adapt and move forward.
Last night’s planting progress showed significant progress over the previous week with corn hitting 80% planted across the country. Corn jumped from 67% the previous week and is above the five year average of 71%. WI came in at 81% complete compared to 59% last week and 59% on average. WI is 52% ahead of where we were last year at this time. Nationally soybeans came in at 53% complete compared to 38% last week and 38% for the five year average.
The only state to be running behind their average is North Dakota where only 20% of the crop has been planted. Current estimates are predicting 800,000 prevent plant acres for ND but that may be partially offset by South Dakota where more corn acres have been planted.

Today is one of the “bounce” days that I have been referencing in recent commentary as the times when producers should be actively making sales. Don’t miss these opportunities!

Have a Safe Day!

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

May 18, 2020

Good Morning,

Corn is unchanged and soybeans are up 5 to start the week.

Support for all markets is coming as America continues to reopen without any major resurgence in the coronavirus. Additional support is coming from reports that an experimental vaccine has showed hope in early tests. A vaccine is considered a crucial step toward lifting social distancing measures and safely reopening economies, schools and events around the globe. While the timeline may be a ways out, progress is being made and hopes are that we could have a vaccine by the end of the year.

Most areas of the Midwest received at least an inch of rain since Friday, with many areas accumulating as much as four to five inches of precipitation. After a week of mostly soggy weather, planting progress in most of the Midwest may ease in this week’s Crop Progress report. But the recent rainfall will likely bring todays total back closer to the 5 yr average. Most of the corn belt will enjoy warm and sunny skies for the first have of this week. Warmer temperatures late this week and into the weekend should help soils dry out and increase emergence across the Midwest.

Chinese buying of soybeans and corn continue but gains will be limited by large supplies and expectations for good crops this year. Producers are advised to be making cash sales and new crop sales on any bounce in the market (1-5-10 cents) because they will be very limited.

Have a Safe Day!

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

May 15, 2020

Good Morning,

Markets re slightly higher this am with corn up 2 and soybeans up 2. Prices are receiving a boost from the energy complex this morning as ethanol production follows energy demand higher amid the COVID-19 pandemic’s recovery. Recent export sales to China also helped to underpin strength to soybeans. A soggy weekend weather forecast that would limit planting progress also contributed to this morning’s gains.
The Trump Administration moved to block shipments of semiconductors from chipmakers to China’s Hauwei this morning. The company depends on them for future growth meaning the White House’s move could cause problems for the Phase 1 trade pact. We await Beijing’s response.

With great planting progress and favorable weather so far this growing season the markets are not only going to struggle to move higher, but struggle to stay where they currently are. Carryout expectations of 3 billion plus that we saw in this weeks report are not going to lead to anything positive in the markets.

Make cash sales and new crop sales on any bounce in the market(1-5-10 cents) because they will be very limited.

Have a Safe Weekend!

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

May 13, 2020

Good Morning,

Yesterday’s report came in pretty close to the middle of expectation. With terrible demand in the first quarter of the year, the USDA made cuts across the board. The numbers that hurt are the new crop balance sheet for corn. Ethanol is expected to bounce back in production, but not nearly enough. Feed and exports are expected to gain some demand back, and some would say the USDA’s forecast would be too large. The phase one deal was supposed to support corn, beans and wheat prices, but the Corona Virus has slowed that. The carryout in corn is really big at 3.3 billion bushels, which is the the largest since the 80’s, when the government had to start set aside programs and government storage. (Set aside programs are desperately needed now in my opinion) The bean carryout was not nearly and negative at 400 million bushels, but when you add them all up it’s going to be a continuation of a tough year.
The US House is expected to vote on a new relief bill for 3 Trillion dollars Friday. The bill is named the Heroes Act, and will still have to pass the Senate next. In the bill, 16.5 billion dollars will be marked for direct farm payments, and also send financial assistance to the Ethanol industry. The USDA will be briefing on 16 billion dollars worth of aid that would be available in June or later. The USDA would like to get the money out to farmers before the Heroes Act would pass in June, and set up another round of payments for fall.
Beans have the best chance to rally long term in my opinion. Corn could get better if crude oil would get back to the mid 30’s but an increase in prices will result in an increase in production and reset the whole thing again. China has the ability to make the US carryout in beans disappear if they buy what they say they are going to, but when has that happened?
Markets are lower today with corn down 4 and soybeans down 9. As I stated in Mondays commentary, producers should take advantage of any bounce in the market because there is little to no reason for this market to move higher and the longer you hold out the worse it could get.

Have a Safe Day!

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

May 12, 2020

Good Morning,

The markets are softer to unchanged this morning with corn down 2 and soybeans up 2.
Last night’s planting progress showed 67% of the nation’s corn planted which compares to 51% last week and 56% on average. Of the major corn producing states only Missouri and Ohio came in below average with most other states significantly ahead of average. Wisconsin was reported at 59% complete compared to 33% last week and 39% for the five year average.
Soybean planting progress came in at 38% complete across the nation compared to 23% last week and 23% on the average. Wisconsin was 35% complete compared to 14% last week and 14% on average.
Traders will focus on today’s USDA report that will be released at 11am. This will give us an update on the old crop S&D numbers as well as the first official estimate of the new crop (2020) S&D tables. Estimates for today’s report are listed below.

2019-20 Ending Stocks (billion bu.)
USDA May estimate Average Estimate April report
Corn 2.098 2.224 2.092
Soybeans .580 .488 .480
Wheat .978 .969 .970

2020-21 Ending Stocks (billion bu.)
USDA May Estimate Average Estimate April Report
Corn 3.318 3.389 NA
Soybeans .405 .430 NA
Wheat .909 .814 NA

As you can see the estimates for the 2020-21 corn ending stocks are HUGE and could potentially become bigger given the planting progress if we have average weather this summer. I talked to a farmer in North Central IL yesterday who said they are about 60% planted in his area and most of the corn and beans could be finished by the weekend given the forecasts. He said they have had plenty of moisture lately that has delayed planting. Despite the wet weather he said they really only need 2 good rains this summer to produce a bumper crop. (1 in early June and 1 in early July) He said it may be time to start looking at the county LDP rate to see how close they get to it!

Check back after 11am for today’s report numbers.

Have a Safe Day!

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

May 11, 2020

Good Morning,

Markets are higher to start the week with corn up 3 and soybeans up 8. Cooler weekend weather and strong export demand is supporting the grains this am. This weekend’s weather was much cooler and some sub freezing temps purchased their way through the corn belt. Thankfully the newly emerged corn was likely too immature for the cold to do any real damage. The forecast looks warmer with near to above normal temps predicted over the next couple weeks.
Look for high numbers in this afternoons planting report as traders are expecting corn to be 65-70% planted with soybeans in the 50% range.
Optimism over demand from China is supporting soybean prices this morning, but there remains concerns about the tensions between the US and Beijing.

Take advantage of today’s bounce to make sales ahead of this afternoons planting progress report and tomorrows USDA report. (Stocks, world production)

I look for the markets to fade into the close ars traders prepare for tomorrows USDA report that will be released at 11am.

Have a Safe Day!

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

May 8, 2020

Good Morning,

Markets are slightly higher this morning with corn trading 2 higher and soybeans trading 6 higher.
Part of the excitement yesterday centered around trade talks between the US and China overnight. Both sides are reporting that talks were productive. The conversation reportedly focused on implementation of the Phase 1 deal. In a statement from the USTR he said “both sides agreed that good progress is being made on creating the governmental infrastructure necessary to make the agreement a success.” Rumors were circling yesterday that the Chinese were looking to secure another couple hundred thousand tons of corn and three to four hundred thousand of beans.

What may hold markets back a little here today is the weather models backing off of their forecasts for record cold that would produce a frost threat to much of the Corn Belt. The models remain cold through the weekend and into Monday, but concern for any real crop damage has waned with the forecast a few degrees warmer than yesterday. A broad ridge/trough pattern will remain in place for several days before we make a shift to a more zonal flow by the middle of next week. This should produce more season temps with highs in the 60’s. 70’s, and even a few 80’s. Overall, the forecast looks favorable for planting and we expect seeding to accelerate with the extended models looking like they will have a nice mixture of warmth, sunshine and rain.

Argentina corn harvest was reported at 38.2% harvested yesterday which is 10% ahead of the 3 year average. Soybean harvest was reported at 78.2% complete compared to 68% for the 3 year average.

Have a Safe Weekend!

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

May 7, 2020

Good Morning,

All commodities are stronger this morning with corn up 4, soybeans up 7 and wheat up 6. The reason for the stronger markets to start the day are reports from Bloomberg that top Chinese and US trade negotiators will speak as soon as next week on progress in implementing the Phase 1 trade deal after President trump threatened to “terminate” the agreement if China wasn’t adhering to the terms.
The planned call will be the first time Vice Premier Liu and USTR Lighthizer have spoken officially about the agreement since it was signed in January. China promised to buy $250 billion worth of US goods and the pressure to catch up in their buying is mounting.
Weather forecasts for the next couple weeks is cooler, but mostly dry which should aid in US producers wrapping up their planting of the 2020 crop. This crop is a long way from being in the bin, but aside from some weather issue during pollination I don’t look for any crop issues to move this market higher.

Producers should be taking advantage of bumps in the market like we are seeing today to get old and new crop sales on the books. Ethanol stocks are still very high and plants are not coming back on line anytime soon. While margins have improved in the last two weeks, they are still deeply in the red. As this crop continues to get in the ground at a record pace and demand remains low, the markets are going to struggle to rally regardless of how much China says they are going to buy. Remember this is an election year and there will be a lot of things said that may not be followed thru on and trade deals could very well be one of them.
Producers can currently lock in $3 old and $3 new crop corn. While these numbers may not seem good, they are a lot better than $2.50-$2.70 that we have seen and are expecting for fall.

Have a Safe Day!

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

May 6, 2020

Good Morning,

Markets are softer this morning with corn down 2 and soybeans and wheat down 5. Trading interest in corn beans and wheat is down to about zero as China is on a Labor Holiday.
President Trump is pushing to reopen the country, and wants people to go back to work and live their everyday lives. “Will some people be affected? Yes. Will some people be affected badly? Yes,” Trump said. “But we have to get our country open and we have to get it open soon.” Know that President of the United States would be at as much risk as anyone to the disease, and his age profile doesn’t help either.
A bill was introduced in the House Tuesday that would boost the funding to the CCC for 68 billion dollars.
The weather forecast for the next 15 days is on the cool side, but will also be mostly dry. These doesn’t look to be any major planting issues, with weather much better than a year ago.

Have a Safe Day!

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