April 14, 2021

Good Morning,

 

Stronger markets this morning with old corn up 12, new crop corn up 6 and soybeans up 19.

Dry weather for the Safrinha corn crop in Brazil is driving prices higher the last two trading sessions.  Brazil raises two crops of corn, the first is primarily used for domestic feed and ethanol.  The Safrinha crop is mostly sold for export.  The shrinking of this crop will make the World export market a tighter place for corn.

The 10 day forecast is still very dry for Central and Eastern Brazil.  Second crop Brazilian corn is entering the critical stage of development and the crop needs rain now.  Temps will be in the 80’s-90’s, not excessively hot.  Western and Southern Brazil will see a chance of close to an inch of rain in the next week.  Argentina has stayed wet during the beginning of their harvest.

The Fund position for corn could be at a new record high today.  The bean position is pretty small in comparison.  Markets take turns on bull runs and this one is all about corn stocks and acres.  South America is able to supply the World with beans, but weather has their corn supply in question. Planting pace is really going to pick up over the next week which should put some pressure on the markets shortly.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

April 13, 2021

Good Morning,

 

Markets opened stronger this morning with corn up 14 and soybeans up 14. Concerns over Brazils weather have added strength to the markets today. Agencies in Brazil are getting concerned about the 2nd crop corn as they dropped production 3.5%.

US corn plantings are near 4 pct vs 2 last week and 3 average. Cold temps have not slowed plantings. Texas has by far made the most progress, with 57% of the state’s corn crop now planted, followed by North Carolina (16%), Tennessee (11%) and Kentucky (10%). Nine other states have measurable progress of between 1% and 8%.

The 10 day forecast for the US has very light amounts of rain for the Central growing region.  Up to a quarter of an inch is projected over the next 14 days.  Most of the heavy rain stays in the far South Delta where they will get up 4-5 inches.  In the back end of the model you can see storms develop in Texas and head East covering Missouri and the Southern tip of Illinois.  The North stays very dry in the entire 14 day model.  Temps will be below normal out into April 28th.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

April 9, 2021

 

 

Good Morning,

 

Corn is up 4 and soybeans are up 2 this morning.

 

Yesterday old corn saw some strength on reports of harvest delays in South America a stronger wheat market and algorithmic trading that sent May and July corn 18-20 higher at some points.

Yesterday saw the funds as buyers of 10,000 contracts of Wheat, 35,000 contracts of Corn and 4,000 Soybeans. They are estimated to be long 7,000 contracts of Wheat; net long 466,000 Corn; net long 175,000 Soybeans.

 

The USDA will release the World Agricultural Supply and Demand Estimates report today at 11:00 central. (estimates below) New crop supply and demand estimates will be released in the May report.

USDA 2020/21 Ending Stocks (million bu)

USDA Ave. Est. Last Year
Corn 1.352 1.388 1.919
Soybeans 119 118 525
Wheat 852 847 1028

 

While things look very bullish in the corn market right now, there are some reasons for anyone long corn to be cautious. Reports from ADM that China will not be taking all the corn that they currently have purchased and will be cancelling or rolling those purchases out to next year. There are also reports from ethanol plants across the Midwest that are looking to shutdown this summer due to corn shortages in their area and extremely high basis levels. One or both of these scenarios playing out would dramatically change the carryout numbers and send the markets in a freefall.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

April 8, 2021

Good Morning,

 

Nice spring rains and higher markets to start the day. Corn is up 8 soybeans are up 5 and wheat is up 12.

 

For the week ended Apr 2, ethanol production was 975,000 barrels per day (the uptick is less than expected by analysts, who had forecast production to rise by as much as 70,000 barrels per day this week); up 1% versus a week ago, up 45.1% versus a year ago.  Stocks were 20.6 mil barrels (down 500,000 barrels from the previous week’s report–this drop exceeds the expectations of analysts who had forecast a drop of as much as 400,000 barrels); down 2.2% versus last week, down 23.8% versus last year.

Weekly export sales were nothing too exciting with old corn coming in at 29.8 million bushel compared to 74.4 million on the 10 week average. Soybeans were negative 3.4 million bushels due to cancelations. The 10 week average for soybeans is 12.8 million bushel.

Estimates for tomorrow’s WASDE report are for the 2021/22 corn carryout near 1.379 billion bushel, soybean carryout at 118 million bushel and wheat at 846 million bushel. This report will be released at 11am.

US weather has a good amount of rain coming to the Central Corn belt and a lot of rain for the Delta.  Totals in Illinois will reach 2 inches where in the South they will get up to 5 inches.  Planting delays will continue in the Delta.  The Western US shows more humidity on the maps this morning than yesterday, with most of the rain down in Texas.  The Dakotas looks to miss most any rain as the system sets up further to the East up into Minnesota.
While things look very bullish in the corn market right now, there are some reasons for anyone long corn to be cautious. Reports from ADM that China will not be taking all the corn that they currently have purchased and will be cancelling or rolling those purchases out to next year. There are also reports from ethanol plants across the Midwest that are looking to shutdown this summer due to corn shortages in their area and extremely high basis levels. One or both of these scenarios playing out would dramatically change the carryout numbers and send the markets in a freefall.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

April 6, 2021

Good Morning

 

Markets are mixed this morning with old corn up 3, new corn down 3 and soybeans up 8 across the board.

 

NASS rated the winter wheat good/excellent at 53% this week vs 62% a year ago.  U.S. Spring Wheat planted was 3% versus 3% a year ago, 2% average. U.S. Corn planted was 2% versus 2% last year, and 2% average.  Much of the wheat crop is poor to very poor at 16%.  Some of this wheat crop is going to get ripped up if the yield potential is not there.  Spring wheat is also going to give way to some acres of corn and beans with where price ratios are headed.  Wheat is an unpopular crop and acres could end up at 100 year lows.

Bloomberg’s estimates for Friday’s WASDE report put corn ending stocks at 1.379 billion bushel vs. 1.502 billion last month. Soybeans are estimated at 118 million vs. 120 million last month. Thoughts are that the USDA will revise their export numbers this month to accommodate the rapid pace we have been selling to China thru the first quarter of the year. Through March 25, the total commitments of US corn were at 2.588 billion bushels already reaching the USDA’s 2.600 billion bushels export projection. Expectations are that they could raise t 100-200 million bushel in Friday’s report. The big question that no one knows is what will China decide to ship by the end of August vs. rolling forward to next year? That decision could dramatically impact prices.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

April 5, 2021

Good Morning,

 

Markets are higher to start the week with old corn up 2, new corn up 6 and soybeans up 18.

Thursday’s trade was kind of a mess in the spread trades between a whole host of commodities.  Post report trade can make some weird things happen as a lot of bets are exited. This is not unusual for big reports, which is why right or wrong they can be very dangerous.  It was bullish for all beans, and yet the price for May beans was down 35 Thursday.  Today should return to more of a normal trade.
This will be day three of liquidation from the crop report.  The market should start to normalize today. China is out of the market on Holiday.  We also have a USDA report on Friday of this week.

Archer Daniels Midland said on Thursday it would restart ethanol production at two of its U.S. corn dry mills this year, as the grains trader expects demand for the biofuel to rebound from a pandemic-led slump. The company had last April decided to temporarily idle ethanol production at its facilities in Cedar Rapids, Iowa, and Columbus, Nebraska due to lower gasoline demand. Demand for corn-based ethanol, blended into gasoline, is set to rise as people are expected to start driving more as COVID-19 vaccinations gather pace and as China imports more volumes. While ethanol demand may continue to increase, exports should start to taper off with high prices as the US loses its competitive pricing to other suppliers.

Last Thursday’s stocks report was neutral to bearish while the acres report was bullish the markets. I would not be surprised to see last weeks 91.14 million acres come in north of 93 million when planting wraps up this spring. Early weather has been good and planting is rolling in the south. If good weather holds for the next 60 day’s we will see more corn acres planted.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

 

March 31, 2021

Good Morning,

 

REPORT DAY!

 

Nothing but today’s report on the mind of traders. Here are the estimates heading into the report:

 

March Quarterly Stocks (billion bushel)

March 2021 Ave. Est. March 2020
Corn 7.701 7.767 7.592
Soybeans 1.564 1.543 2.255
Wheat 1.314 1.278 1.415

 

Planting Intentions (million acres)

March 2021 Ave. Est. USDA 2020
Corn 91.144 93.208 90.819
Soybeans 87.60 89.996 83.084
Wheat 46.358 44.971 44.439

 

 

Check back after 11am to see where the numbers came in.

 

If you havent taken risk off ahead of today, I would suggest calling your buyer to get something done.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

March 29, 2021

Good Morning,

 

Markets are lower this am with corn down 6 and soybeans down 5 to start the week.

 

Going into the crop report, the funds are still holding a hefty amount of corn futures, not very far from the record amount they owned in January.  Traders are long soybeans, but are nowhere as close to as long from January as South American harvest has tempered buying for the past two months.

The dry trend in Brazil is expanding to the Southern half of South American.  There is almost no rain in the forecast from Mato Grosso and South.  Argentina is turning to a drier trend along with Central and Eastern Brazil.  Temps will be below normal in Argentina and above normal in North and Eastern Brazil.  Harvest is going to accelerate in the next 10 days.  Late season corn is going to need a rain at some point.  The weather forecast is not bullish or bearish.

USDA Secretary Vilsak is seeking ways to get more acres signed up for the CRP program.  The US has about 20 million acres in the program and Congress had set the program closer to 25 million.   A quarter of the acres will expire in the next year.
Here are the estimates for Wednesday’s report:

 

March Quarterly Stocks (billion bushel)

  March 2021 Ave. Est. March 2020
Corn   7.767 7.592
Soybeans   1.543 2.255
Wheat   1.278 1.415

 

Planting Intentions (million acres)

  March 2021 Ave. Est. USDA 2020
Corn   93.208 90.819
Soybeans   89.996 83.084
Wheat   44.971 44.439

The increase in corn and soybean acres is mostly coming from prevent plant, cotton and spring wheat.

 

Look for more selling ahead of Wednesdays USDA planting intentions and stocks report as traders make slight adjustments to their positions.

 

Reminder that there are no markets on Friday 4/2/21 as the trade observes Good Friday.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

March 26, 2021

 

Good Morning,

 

Markets are mixed this am with corn up 1 and soybeans down 1.

Most of what is going on here is end of month, end of quarter and pre-positioning for the US crop report next Tuesday.  The Funds did clear out a sizable amount of position dropping 50,000 corn over the last 10 days.  The bean position was reduced by close to 35,000 contracts pre-report.  Soyoil which had made new highs this week gave it up in limit down fashion with the funds selling out 12,000 contracts yesterday.  The meal market has made net gains on the week as Funds liquidated out some of the bear leg of their trade.  The positions have dropped, but open interest for the week has hardly changed.

The weather in the US is going to clear out over then next 10 days. Rain moves off into the East, leaving most of the middle of the US open.  Temps are going to warm up and be above normal over the same time.  We will probably see some planting late next week for some early season beans.

USDA March report: Trade estimates for corn stocks 7,767 vs 7,952 ly, soy 1,543 vs 2,255, wheat 1,278 vs 1,415. Trade estimates for US 2021 corn acres near 93.2 mil vs 90.8 ly, soy 90.0 vs 83.1, all wheat 45.0 vs 44.3.  We will have more talk about the crop report estimates next Monday and Tuesday.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

March 25, 2021

Good Morning,

 

Softer markets this morning with corn opening 6 lower, soybeans 15 lower and wheat down 12.

 

Crude oil continues to drop and has been trading sub $60/barrel for the last few days. Covid outbreaks in Europe and the blockage of the Suez Canal have the crude oil market headed lower, which is not good for corn prices. As I mentioned in yesterday’s comments it was crude that led the charge lower a year ago. Will it be the leader again this year?

Farm Futures magazine indicated that producers expect to plant 93.6 mil acres of corn in 2021, up 3 pct from the 90.8 mil acres seeded a year ago. Soybean plantings for 2021 were forecast at 88.5 mil acres, up 6 pct from the USDA 2020 estimate of 83.1 million acres. Total wheat plantings were seen at 45.6 mil acres, up 2.8 pct year-on-year.
Export sales this week were 343,600 wheat, 4,481,900 mt of corn with China buying 3,890,600 mt, and 101,800 mt of beans. China bought no beans this week, moving the import program to South America.
Central and Eastern Brazil have no rain in the forecast for the next 10 days.  The 11-15 day holds the the same hot dry pattern as a high pressure ridge has set up for the past 2 weeks.  Rains are being driven south into Southern Brazil, but mostly Argentina.  Harvest is already under way in Argentina and will pick up speed in April.  Brazilian harvest will be aided by the dry weather, while the second crop corn is going to have moderate stress.  As long as there are timely rains, this is less of an issue for Brazilian corn.
I don’t see the market rallying or breaking very far until the March 31st report next week.  ASF in China makes traders unwilling to take on new positions, questioning if the disease is worse than reported (it probably is, just under better control).  Funds positions are still mostly the same as a month ago and open interest hardly changes on a daily basis.  That will not be the case next Tuesday as we have one of the more dangerous reports of the year.  This looks like a day when nothing good happens, so I guess we’ll see if it can hold together again.

 

Whether you are a seller or buyer of grains, I would strongly recommend having 70%+ of your old crop business done and 50%+ of your new crop business done. No one can predict what next weeks report will give us or where the markets will head in the coming months but taking risk off the table is the safest way to remain in business.

 

 

Have a Safe Day!

 

 

Garry Gard

920-348-6844

ggard@didionmilling.com