February 24, 2020

Good Morning,

Today is a risk off day that could lead to many more as there appears to be serious concern over the spread of the coronavirus. Corn is down 6, wheat down 16 and soybeans are down 16 to start the day.
US equity futures tumbled alongside stocks in Europe and Asia on Monday as authorities struggled to keep the coronavirus from spreading more widely outside China. Safe havens including treasuries and gold jumped. Equity futures are pointing to declines that would have Wall Street down almost 4% since Wednesday as the deadly virus spread in countries including Italy and Iran.

The risk-off mood hardened as the epidemic spread to more than 30 countries, with South Korea reporting a jump in infections and Italy locking down an area of 50,000 people near Milan. Finance chiefs and central bankers from the largest economies met at the G-20 in Saudi Arabia over weekend and warned that they saw the virus bringing downside risks to global growth.
Governments and companies are curbing travel and trade in an attempt to contain a novel pathogen that can be transmitted by people without symptoms. Adding to the anxiety Monday was China announcing an easing of the quarantine of Wuhan, only to retract the statement hours later. Beijing did impose a total ban on the trade and consumption of wild animals, but it seems a like it’s a case of “too little, too late”.

Have a Safe Day!

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

February 20, 2020

Good Morning,

USDA Secretary Perdue spoke this morning about their new initiative meant to increase US farm productivity while reducing agriculture’s impact on the environment. The USDA’s goal is to align resources to help reduce food waste by 50% and cut nutrient runoff by 30%.

The USDA’s Chief Economist also spoke this morning touching on trade and just what the USDA envisions for its 2020 WASDE forecast on acres, yield and stocks. Last year’s planting difficulties resulted in a 13M fewer soybean acres, equivalent to more than 600M bushels. Lower carry-in supplies, support an increase in soybean area to 85M acres. Corn area is expected to rise 4.3M acres to 94M following last year’s prevented plantings, supported by new crop prices that are relatively favorable to corn.
These initial ideas indicate the expectation that we see a rebound in acreage to 224M after being significantly impacted by flood last year. This is still moderately below projections provided from 2015-2018. Corn at 94M, while up significantly from last year, it was pretty much in line with expectations. 85M acres of beans was also in line with the average guess.
The 2020/21 corn average farm price expectation was put at $3.60/bushel and compares to 2019/20’s estimated $3.85. USDA sees the 2020/21 U.S. average farm price for soybeans at $8.80/bushel vs an estimated $8.75 for 2019/20.
Corn and soybeans are both trading 1-2 lower to start the day.

Have a Safe Day!

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

February 18, 2020

Good Morning,

Markets are higher this morning on comments from China and reports from the UN regarding locusts.

The UN issued a warning regarding a large swarm of locusts that have migrating across East Africa with fears of them spreading to India and South East Asia. The migration which has already traveled across most of Africa, the Red Sea and a substantial part of the subcontinent, reached close to China’s Southwestern border over the weekend according to reports.

China has committed to boosting its purchases of goods and services from the US by 200 billion dollars as part of the two year agreement. The US goods eligible for tariff exemptions include agriculture and energy products like pork, beef, soybeans, liquefied nature gas and crude oil. It also looks like exemptions will be imposed on denatured ethanol, wheat, corn and sorghum. Chinese firms can start submitting applications on March 2nd for duty free import licenses.

Brazil is going to see above normal rains over the next 10 days. Temps will be on the cooler side, but this forecast is wetter than last week. Southern Argentina will be drier going out into Feb 28th. The break in the line of storms is right at the Norther growing region. This has kind of been their weather pattern for the whole season. Ten to fifteen days of dryness followed by a 1-2 inch timely rain. Brazil on the other hand just keeps looks wet, followed by more wet.

Corn is up 3, soybeans up 2 and wheat is up 12 to start the morning.

Have a Safe Day!

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

February 17, 2020

Good Morning,

Reminder that there are no markets today in observance of the Presidents Day holiday.

Producers should be actively monitoring and moving grain in their bins this winter due to quality issues that are going to make this crop one you DO NOT want to store very long. There are still some very good basis levels trading for corn delivery into the spring months. There is very little carry in the market which indicates that now is the time to be making cash sales. Commercial elevators are aggressively selling to end users due to the lack of carry which is going to cover demand and widen basis. Basis sales for June and July are also advised as I expect these levels to widen out after we get this year’s crop in the ground. New crop prices are at very attractive levels ($3.65-3.85 range) for fall and beyond. If we get anywhere near the acres planted that producers are planning this spring, these levels will evaporate quickly.

Have a Safe Day!

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

February 14, 2020

Good Morning,

Markets are mixed this morning with corn down 1 and soybeans up 1.
Tomorrow marks 30 days since the US and China signed the Phase 1 trade agreement. The pros will be on watch for signs that China is opening their Ag markets by either issuing duty-free import licenses and by some other sort of tariff reductions.

Yesterday’s export sales report showed another poor week of movement. The USDA’s newly adjusted forecast calls for a 340 million bushel decline year over year. More talk about Asia buying Ukraine over US origin corn. Ukraine corn into Japan and Northern China is currently $4/MT cheaper than US corn. Ukraine corn into Southern China currently $19/MT cheaper. This is concerning to traders and should be to producers as well. Regardless of the “Phase One” deal, the Chinese will buy when prices are favorable and right now they are not.
We have not seen much movement in the funds positions over the last 3 weeks in corn as they maintain a net short position of 69,000 contracts. Their soybean position has not moved dramatically but has narrowed to short 57,000 contracts in the last week.

Markets will be closed on Monday in observance of the Presidents Day holiday.

Have a Safe Day!

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

February 13, 2020

Good Morning,

Markets are mixed this morning with corn off 2 and soybeans up 5.

Traders will be watching to see if China follows through with their pledge to open their markets to US Ag goods on February 15th as stipulated in the Phase 1 trade deal. Treasury Secretary Muchin has indicated that the implementation of the deal has slowed due to the coronavirus.

A surge in confirmed cases of coronavirus after the province at the epicenter of the outbreak revised its method for counting infections has the pros taking a cautious approach early in the trading session. Officials there added nearly 15,000 cases to their latest estimates of infections and raised deaths by 242 to 1,367 total (2.2% mortality rate). The additions raised the total number of people infected in Hubei by 45% to 48,206. The global tally increased to about 60,000. While disturbing, the jump is actually due to old cases that were reclassified after a new group of patients were diagnosed through the use of CT imaging scans rather than previous method of nucleic acid testing kits.

South American weather models are in good agreement in calling for reduced rains over the next 10 days for Argentina. Rains are slated to begin later today and push north; however, the latest runs do not have the jet stream dropping as far south that will keep the heavier rains centered on the northern half of the country. No extreme heat is seen. Farmers in Brazil will welcome the forecasted drying trend that will help advance soybean harvest and the planting of winter corn.

Have a Safe Day!

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

February 12, 2020

Good Morning,

Yesterday’s report did nothing to hurt the market, but also nothing to support it either. The report was the usual February changes that had been expected by the market. Cutting exports in corn made sense and further cuts will be coming unless China is going to make up the difference. Some of the US exports can be back loaded, so cutting back the entire pace lost could be premature. Corn exports are expected to expand next year and be back closer to the 2017/2018 levels. The USDA raised ethanol by 50 million bushels, which kept the carry out for corn the same.
Soybeans saw an increase in exports of 50 million bushels as we are ahead of pace and China will be seeking more beans in the future. Ending stocks for soybeans were 425 million bushels. The big challenge will be competing with Brazil’s biggest crop that keeps getting bigger and its currency which is at record lows versus the dollar. Brazilian beans were increased to 125 mmt. This is a 7 mmt increase from last year.
South American weather forecast are drier today, but still have some rain coming. Argentina will see regular rain in the coming days, helping soybeans pod. The key right now is that no extreme heat is forecasted.

Have a Safe Day!

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

February 11, 2020

Good Morning,

Quiet markets overnight and early this morning as traders await todays USDA Crop Production/S&D report. Traders are anticipating adjustments in the US tables but nothing too bullish. They could adjust the export forecast and raise demand while holding off on a boost in ethanol usage for a later date. US corn shipped to China is still trading at a $4/mt premium to Ukraine corn which will limit any interest for US corn in Asia.
The South American weather forecast for Brazil has rains continuing over the next 6-10 days for most of the growing regions. Argentina weather forecasts call for dry weather the rest of the week, but rains return to most areas beginning next week.
Estimates for today’s report are below:

US Stocks (million bu)
February 11th Average Est. January 10th
Corn 1.892 1.856 1.892
Soybeans 425 448 475
Wheat 940 953 965

Producers should be actively monitoring and moving grain in their bins this winter due to quality issues that are going to make this crop one you DO NOT want to store very long. There are still some very good basis levels trading for corn delivery into the spring months. There is very little carry in the market which indicates that now is the time to be making cash sales. Basis sales for June and July are also advised as I expect these levels to widen out after we get this year’s crop in the ground. New crop prices are at very attractive levels ($3.70-3.85 range) for fall and beyond. If we get anywhere near the acres planted that producers are planning this spring, these levels will not remain.

Be sure to have your firm offers in with our buyers as any spike in the market or push in price will not last long.

Have a Safe Day!

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

February 5, 2020

Good Morning,

Rumors of a new vaccine to combat the Coronavirus had provided some support to the markets yesterday and overnight, but follow thru this morning is not there in corn. With infections from the virus now topping 24,000 and deaths approaching 500 news that a new drug that was effective against the virus had traders back in the market. The treatment was tested on cells outside the human body, meaning it would be a long way from any clinical trials on people, let alone approval as a marketable drug. Markets opened this morning with corn down 2, soybeans up 3 and wheat unchanged.
South American weather has been keeping a bearish tone on the markets with traders needing an excessively wet weather pattern to develop in order to add premium.
Private analyst FC Stone increased their projections of Brazil’s 2019/20 soybean harvest by 1.9% from last month’s estimates. The harvest estimate was raised 4.56 billion bushels, up 8% from last year as strong yields trickle in from the early stages of harvest.
Producers should be actively monitoring and moving grain in their bins this winter due to quality issues that are going to make this crop one you DO NOT want to store very long. Historically the markets do not offer a lot of opportunity for higher prices in February and March so anyone that needs cash flow in those months should not hold out for higher prices. There are still some very good basis levels trading for corn delivered into spring. There is very little carry in the market which indicates that now is the time to be making cash sales. Basis sales for June and July are also advised as I expect these levels to widen out as we get this year’s crop in the ground. Cash prices are in the $3.80-3.90 range for old crop and $3.70-3.90 range for new crop. Give us a call today to discuss your plan for both crops and lock in these levels.

Have a Safe Day!

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

February 3, 2020

Good Morning,

Prices are starting the week mixed with corn down 3 and beans up 3 this morning as Chinese traders return from the week long Lunar New Year Holiday to hammer China’s financial markets. China’s stock market opened to the worst wave of selling in years with thousands of shares falling by the daily limit after just minutes of trading. It was the first chance investors had since January 23 to trade, due to the extended Lunar New Break. The selling has not been confined to the financial markets with commodities also taking it on the chin.
The outbreak of coronavirus will likely reduce China’s ability and willingness to buy huge amounts of US ag produce, as agreed to. It has already been reported that China is seeking “flexibility” on phase one trade commitments as it focuses its resources on the control of coronavirus.
South American weather forecast features normal to above rains in Brazil and normal rainfall for Argentina. Overall conditions are positive for all of South America and 10% of the soybean crop in Brazil has now been harvested. The weather forecast is predicted to remain favorable for Argentina as harvest activity will start to pick up there as well.

Have a Safe Day!

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