June 11, 2019

June 11, 2019

Good Morning,

Markets were weaker overnight and look to trade lower this morning following last nights planting progress report. Weather last Thursday thru Sunday allowed more field work in IL, IN and OH than had been anticipated. Last nights planting progress had the nation at 83% complete compared to 67% last week. WI jumped to 78% from 58% last week. IL, IN and OH increased by 28, 36 and 17% respectively. Planting will soon be a non-issue as time will have run out, most likely at the end of this week and the forecast looks like there will be plenty accomplished this week.
USDA will issue their new US and World supply and demand numbers at 11am today.(estimates below) Most do not look for many changes in soybeans and wheat. The USDA could lower exports in all three commodities. The big unknown is what will the USDA do to US corn acres and yield. They should be lower due to the wet spring. This should lower US and World carryout, but will it be enough to push prices higher is unknown with many traders already anticipating less acres and lower yield.
USDA Secretary Sonny Perdue said as his agency will have more details on how it plans to dole out the $16 billion to farmers and others in the coming weeks and urges growers to “plant what works best on your farm.”

USDA 2019-20 Corn and Soybean Production (billion bu/bpa)
June Est. Average Est. May Est.
Corn Production 13.680 14.251 15.030
Corn Yield 166.0 172.4 176.0
Soybean Production 4.15 4.123 4.15
Soybean Yield 49.5 49.0 49.5

USDA 2018-19 U.S. ending stocks (billion bu)
June Est. Average Est. May Est.
Wheat 1.102 1.121 1.127
Corn 2.195 2.123 2.095
Soybeans 1.070 1.004 .995

USDA 2019-20 U.S. ending stocks (billion bu)
June Est. Average Est. May Est.
Wheat 1.072 1.118 1.141
Corn 1.675 1.917 2.485
Soybeans 1.045 .983 .970

The run up in the markets over the last couple weeks resulted in a lot of corn and beans getting priced at profitable levels. As usual, the best prices were locked in by producers that had “Firm Offers” in place. Now that spring field work is coming to an end, producers should be looking to put their next level of offers in with their buyers. If possible, I would advise having your offers in prior to today’s report to capture any short electronic rally that this report may offer.

Have a Safe Day!

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

June 7, 2019

Good Morning,

Markets are softer this morning to end the week. July corn was unable to maintain the upward momentum overnight following yesterday’s turnaround. Equity markets are relatively quiet despite the Trump Administrations threat of additional tariffs against Mexico looming on Monday.
The market has seen some selling pressure as weather forecasts become clearer with farmers across the Corn Belt looking like they will enjoy favorable weather for the 11th hour planting through the middle of next week.
Yesterday’s export sales report was disappointing to say the least. Corn came in at a negative 300,000 bu., due to cancellations. Argentina and Brazils record production and supply has and will continue to have an impact on US demand.
Next weeks planting progress (Monday afternoon) and USDA S&D report (Tuesday morning) are highly anticipated by traders looking for future direction.

Have a Safe Day!

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

June 6, 2019

Good Morning,

Markets are lower again this morning with favorable planting and growing weather in the forecast. The U.S. Midwest weather forecast changed to significantly less rains over the next 5 days and the 6 to 10 day period is also a bit drier. The U.S. Delta and the Southeast has a period of wet weather through early next week.
President Donald Trump said on Wednesday that progress was being made in talks with Mexico to stem the flow of migrants to the United States and would continue on Thursday, but unless an agreement can be reached a 5% tariff on Mexican goods would begin on Monday.
With the anticipation of lower production, Smithfield foods purchase of 500,000 to 1 MMT of South American corn for 19/20 makes sense. There is no way the ECB is going to produce enough corn to match 18/19 domestic consumption for ethanol, feeding, and exports. Other animal feeders on the East Coast and in the SE may looking at doing the same thing, which will continue to reduce the demand for US corn!

Have a Safe Day!

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

June 4, 2019

Good Morning,

Weekly crop progress reports were unsurprisingly friendly as only two-thirds of the corn crop and less than 40% of the bean have been able to be seeded this spring. While the corn is obviously record slow, the beans aren’t far behind with their second slowest rate ever. If we use the March planting intentions data, Monday’s report means that farmers still have over 30M acres of corn and over 50M acres of beans that still haven’t been planted.
Major weather models are in good agreement in calling for a tropical system to move in over the Southeast that will shift the wet weather south and out of the Northern-half of the Corn Belt. This will allow farmers from Nebraska in the west clear across the I-80 corridor all the way to Ohio and points north to make an 11th hour push to get as many acres seeded before the next round of showers and storms move through.

It’s being reported (unconfirmed) that USDA Secretary of Agriculture Sonny Perdue changed his statement today regarding Prevent Plant acres counting toward Market Facilitation Payments. Initially he said that they would not when the program was announced. Last week he said that they may, but that farmers would not be told probably until July. Today he reportedly stated that he hopes to have “a definitive answer” by the end of this week. That could dramatically impact decisions on Prevent Plant.

Have a Safe Day!

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

June 3, 2019

Good Morning,

Markets are higher this morning with corn up 2, beans up 7 and wheat up 16. Wheat is providing the boost this am as dry weather in Russia and additional rainfall in the plains provide support following Friday’s selloff.
Traders continue to focus on Chinese trade talks and Mexican tariffs. The recent escalation of rhetoric between Beijing and Washington following the Trump administration’s new tariffs on $300B of Chinese goods has made the meeting between the President’s of the world’s two biggest economies at the upcoming G20 meeting in Japan critical to finding a solution. If not I fear that this will continue to drag out long enough to become an issue in the 2020 elections.
Look for planting progress on corn to be 70-75% complete this afternoon with soybeans coming in around 40-50% complete. Temperatures look more seasonal and that will help going forward.

Have a Safe Day!

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

May 31, 2019

Good Morning,

News from the White House that it would place a 5% tariff on all imported products from Mexico beginning June 10th in attempt to stem the flow of illegal immigration has the CBOT Ag complex under pressure. Corn is down 6, beans down 3 and wheat down 12 cents.

While the weather has been a driver of the markets over the last couple weeks, fund managers are concerned about Trumps plan to close the boarder. The announcement on the tariff included the threat to increase the duty 5% every month until it reached 25% unless the Mexican government makes significant progress in solving the problem.

Given that Mexico imports more than 600M bu. of corn and 140M of soybeans the impact could be another significant hurdle for the US Ag markets. South American crops are huge and these new tariffs could easily have the Mexicans turning there for cheap imports.

Weather models are in good agreement that Mother Nature is finally going to cooperate a little over the next week. Forecasts show a warmer and drier outlook that should allow a significant amount progress be made in getting crops in the ground. Those in the eastern Corn Belt can expect a dry window that should last until the middle of next week.

Have a Safe Day!

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

May 30, 2019

Good Morning,

Markets are higher this am with corn up 8 and soybeans are up 7 to start the day. Additional rains fell across the US again overnight. Major weather models continue to show a moderation in this springs weather pattern over the next week to ten days. While rains won’t completely shut off, the drier weather will be welcome as it should be enough for more crops to get planted.
With this morning’s rally it looks as though the funds have exited their record short position in corn and should now be long. How long are the traders willing to be in this market is unknown. I believe with the exit of their short position we will see the daily volatility decrease and not have as many big daily rallies.

Have a Safe Day!

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

May 28, 2019

Good Morning,

Markets are higher following an extended weekend that gave us the weather they were forecasting, wet! The forecast has heavy rains moving through the Midwest from Tuesday through Thursday this week. Another similar system builds on Sunday that builds into Tuesday of next week. After this system some heavy rains hold in the West covering Kansas and Missouri. We don’t see any organized storm systems after June 8th and temperatures will warm up. We are at risk of a change in the weather for the better now. A forecast change will increase the volatility in prices. There will definitely be prevent plant acres this year, but prices and a government payment are going to keep that lower than expected. The longer this market rallies, the more corn that will get planted late. Planting progress is expected to be 60-70 percent planted in corn, 30-35 percent in beans this afternoon. We have 35 million acres of corn to plant and roughly 60 million to go in beans. There was a lot of corn planted around our area over the weekend and I have talked to more and more producers that are done with corn. I talked with a producer in central IL (Champaign) who said the current prices have them planning to go well past their prevent plant dates because the revenue is better. They are changing out seed for shorter day corn. (switching from 118 day to 110 day)
Usually in a weather market you should sell each week the market is up. There will be a day that we start the morning sharply lower, and high of the market will only be obvious from the back side of the hill. If you have corn planted, I recommend scaling into sales on this rally. Don’t get caught in a bullish mood and miss an opportunity to market at profitable levels.

Have a Safe Day!

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

May 24, 2019

Markets closed higher today on continued wet forecasts thru the weekend. This has led to a mass exit of the funds short position that they have been carrying for the last several months. Funds have reduced their short position in corn by over 250,000 contracts in the last two weeks. Corn is the only commodity they are getting out of at a rapid pace as they remain short 153,000 contracts in the bean market. There are no markets on Monday, so Tuesdays trade could be interesting depending on how the weather models look compared to todays. We will also get a planting progress update on Tuesday afternoon that is expected to jump into the 65-70% complete range. While this may be behind normal, it would be a number that should slow the markets climb.
Yesterdays USDA announcement(info below) is going to result in alot more acres getting planted to some commodity this year that may have went to prevent plant previously. The exact $/acre have not been confirmed, but some analysts are projecting that the payment will be close to $50/acre.

The USDA announced a support program yesterday for farmers impacted by “Unjustified Retaliation and Trade Disruption”. Here are the details:
“Market Facilitation Program (MFP) for 2019, authorized under the Commodity Credit Corporation (CCC) Charter Act and administered by the Farm Service Agency (FSA), will provide $14.5 billion in direct payments to producers.
Producers of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat will receive a payment based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions. Moreover, total payment-eligible plantings cannot exceed total 2018 plantings.
Dairy producers will receive a per hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.
Tree nut producers, fresh sweet cherry producers, cranberry producers, and fresh grape producers will receive a payment based on 2019 acres of production.
These payments will help farmers to absorb some of the additional costs of managing disrupted markets, to deal with surplus commodities, and to expand and develop new markets at home and abroad.
Payments will be made in up to three tranches, with the second and third tranches evaluated as market conditions and trade opportunities dictate. The first tranche will begin in late July/early August as soon as practical after Farm Service Agency crop reporting is completed by July 15th. If conditions warrant, the second and third tranches will be made in November and early January.
Additionally, CCC Charter Act authority will be used to implement a $1.4 billion Food Purchase and Distribution Program (FPDP) through the Agricultural Marketing Service (AMS) to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service (FNS) to food banks, schools, and other outlets serving low-income individuals.
Finally, the CCC will use its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program (ATP) administered by the Foreign Agriculture Service (FAS) to assist in developing new export markets on behalf of producers.”
Reminder that there will be no markets on Monday.

Have a Safe Weekend!
Garry Gard
920-348-6844
ggard@didionmilling.com

May 23, 2019

Good Morning,

Markets started off higher this morning but has taken a step back as traders analyze the US weather forecasts for the extended weekend and the USDA’s announcement.

The USDA announced a support program for farmers impacted by “Unjustified Retaliation and Trade Disruption”. Here are the details:
• “Market Facilitation Program (MFP) for 2019, authorized under the Commodity Credit Corporation (CCC) Charter Act and administered by the Farm Service Agency (FSA), will provide $14.5 billion in direct payments to producers.
o Producers of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat will receive a payment based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions. Moreover, total payment-eligible plantings cannot exceed total 2018 plantings.
o Dairy producers will receive a per hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.
o Tree nut producers, fresh sweet cherry producers, cranberry producers, and fresh grape producers will receive a payment based on 2019 acres of production.
o These payments will help farmers to absorb some of the additional costs of managing disrupted markets, to deal with surplus commodities, and to expand and develop new markets at home and abroad.
o Payments will be made in up to three tranches, with the second and third tranches evaluated as market conditions and trade opportunities dictate. The first tranche will begin in late July/early August as soon as practical after Farm Service Agency crop reporting is completed by July 15th. If conditions warrant, the second and third tranches will be made in November and early January.
• Additionally, CCC Charter Act authority will be used to implement a $1.4 billion Food Purchase and Distribution Program (FPDP) through the Agricultural Marketing Service (AMS) to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service (FNS) to food banks, schools, and other outlets serving low-income individuals.
• Finally, the CCC will use its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program (ATP) administered by the Foreign Agriculture Service (FAS) to assist in developing new export markets on behalf of producers.”
Reminder that there will be no markets on Monday so making sales today or tomorrow ahead of any potential weather changes may be the safe move.

Have a Safe Day!
Garry Gard
920-348-6844
ggard@didionmilling.com