November 25, 2020

Good Morning,

Markets are down 4 in corn, and down 6 in bean. Crude oil is up 40 and US Stocks are down 50.  A two sided Holiday trade is expected in most markets today and Friday.  Market hours are normal today, but close early at 12:00 Central on Friday.  Trading interest is going to be diminished today, traders won’t take any risk until Monday of next week, especially in beans with South American weather forecast changes possible, and the potential for Chinese soybean cancelations.

Reuters is reporting that private importers and processors of soybeans in China are looking to cancel out of some of the cargoes of US beans purchased early this year.  The importers that did not fix futures during the purchase are looking at negative margins on delivery, and are better off eating the cost of the cancelation.  Cargoes can be rolled out to next year if necessary with trading cost.  US Gulf basis had dropped from +90 to +60 in the past week.  New Chinese business has been absent.  The buying started in June, and much of what is on the books had futures coverage at the CME, when prices were low.

 

Have a Happy Thanksgiving,

 

Garry Gard

920-348-6844

ggard@didionmilling.com

November 24, 2020

Good Morning,

 

Markets are weaker this morning with corn down 4 and soybeans are down 9. Overnight saw more weakness in the markets with rumors about China. Talk that China will wash out open US sales and could switch some sales to Brazil. Despite talk of expanding hog numbers, China crush margins have turned negative and soymeal demand has slowed. Large volume of soybean imports to arrive is also weighing on margins. All it takes is someone to mention a cancelation and beans can drop.  At some point roll backs, and switches to South American are inevitable.  This happens all too frequently and is a huge reason producers need to take advantage of the rallies we have seen.

One weather map is adding rains for parts of Brazil and Argentina is also offering resistance to futures.

This could be a month end correction or something deeper than that is sales are cancelled but either way the markets are at very good levels and should be captured.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

November 23, 2020

Good Morning,

 

Markets are stronger to start the week with corn up 4 and soybeans up 9.

 

A Covid-19 vaccine has been developed at the University of Oxford. Early analysis had stopped 70% of participants falling ill.  The effectiveness rose to 90% for one of two regimens, using half a dose followed by a full dose later, close to the same results as Pfizer and Moderna.

Reports that the Russian ag ministry is considering putting a duty on grain exports to preserve domestic supplies is supporting wheat which is up 9.  The Ag ministry is already willing to subsidize wheat millers to lower flour prices.  An export tax would limit further sales out of Russian and would be bullish to European and US wheat prices.

The weekend weather was dry and temperatures were above normal for Brazil and Argentina, crop stress is increasing.  The 10 day forecast has about as dry a forecast as you can have for Brazil, which is really unusual. Southern Brazil and Argentina do have better chances of rain, and are about the best that have been forecast for months, with 1-4 inches coming in the next 10 days.  The 11-15 day model is also dry for Northern Brazil, while Argentina should see more rain accumulate.
Prices faded against this exact same rally on Friday, going into a weekend with covid risk abound.  This rally probably sticks today, with news out of Russia, and more dry weather for Brazil.  Argentina and Southern Brazil getting rain is probably holding the market back from bigger gains.  $4.30 appears to be the ceiling for CZ at the moment with strength fading as we get closer to that level.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

 

November 19, 2020

Good Morning,

 

Weaker markets to open the day with corn down 5 and soybeans down 7. The grain markets are losing the outside market tailwinds as the week progresses and have taken the opportunity to bank some profits off multi-year highs this morning.

This morning’s weekly export sales report showed corn at 42.9 Mil. Bu compared to the 10 week average of 67.5. Soybeans came in at 51.0 Mil. Bu. compared to the 10 week average of 85.2. While both were lower than the 10 week average they were above trade estimates.

Soybean prices are retreating on news that central and north Brazil saw .50-2.50 inches of rain. This was more than expected. There is also talk that the dry areas of south Brail and north Argentina could see some new rains. Lack of new China buying US soybeans is also offer resistance near new contract highs. China soybean crush margins have turned negative.
Overall demand for U.S. commodities remains extremely strong and will keep the trade skittish into the new year, and until a decent South American harvest can be reasonably assured.

There is too much Covid news for the markets to resume a higher path for now.  Fund managers are banking some profits, which started in Europe overnight.  We have seen hardly any break in the market lately, but we have also seen prices close well off the high’s for several sessions.   This could be the beginning of the volatility state of the market. Remember, we don’t run out of beans in November, we run out in August, and a lot is going to happen between now and then.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

November 18, 2020

Good Morning,

Markets stronger this morning with corn up 3 and soybeans up 15.

Early indications are that the market is giving some strength to reports from the FDA and private pharmaceutical.  The Food and Drug Administration issued an emergency use authorization to Lucira Health Inc’s rapid result All-In-Test Kit.  The test can be self-administered and provide results in 30 minutes or less.
Pfizer said final results from the late-stage trial of its COVID-19 vaccine show it was 95% effective, adding it had the required two-months of safety data and would apply for emergency U.S. authorization within days.
Prices finished off the highs yesterday, with weakening outside markets.  Corn has mostly been a follower, and hasn’t even tried to test the Crop report high from last week.  The Funds are already long so many contracts it’s hard to get much more push.

While we are getting closer to a vaccine, it is still a long way off from distribution and with numbers on the rise we are seeing more and more areas close down again. It’s going to be a long grind but making some sales with the current market strength will help producers weather the storm.

 

Have a Safe Day.

 

Garry Gard

920-348-6844

ggard@didionmilling.com

November 16, 2020

 

Slightly firmer markets to start the week with corn up 4 and soybeans up 2.

Limited news over the weekend has the markets feeling stale. With the continued concern over COVID and what implications looming shutdowns could have on the economy, traders will remain wary. Producers should not be complacent and thinking the markets are going to continue to climb or even hang where they are. If we were to see a 4-6 week shutdown this market could crumble back to the numbers seen last spring! The USDA’s report on Tuesday had a 11.5% stocks to use ratio. This could easily climb to 15% with a shutdown. $4 can still be sold for April forward and is a level I would recommend making sales.

Have a Safe Day

Garry Gard

920-348-6844

ggard@didionmilling.com

 

November 13, 2020

Good Morning,

Corn is down 1, beans up 3 and wheat down 3 to open the day. The corn and wheat markets have completely wiped out the gains from the USDA report on Tuesday.

The last two days we have seen the market shifting to what would happen under a Biden Presidency as his COVID19 advisor proposed a 4-6 week national shutdown to control the virus despite having a vaccine. This action would strike directly at the US’s productivity and demand for certain commodities. As experienced in the last shutdown, gasoline took a major hit in usage and still hasn’t fully recovered. Less gasoline usage also reduces the US ethanol consumption. As the USDA removed 465 mbu from the US S/D that pushed carryout below 1.8 bln with new export expectations and lower production, now the trade is presented with a governmental action that could add 250 mbu of supply back to the corn table from reduced corn for fuel ethanol production. COVID19 cases in the US has had some states (CA, IL, IA, MN) take early action to stave off rising positivity rates. Not only is the domestic situation under the threat of shutdown but how much will it bleed into import/exports where countries, who believe they have the disease under control, look to hold off from reimporting the disease.

As I have stated in the last couple weeks, producers should not be complacent and thinking the markets are going to continue to climb or even hang where they are. We have lost 20 cents in the last two days and if we were to see a 4-6 week shutdown this market could crumble back to the numbers seen last spring! The USDA’s report on Tuesday had a 11.5% stocks to use ratio. This could easily climb to 15% with a shutdown. $4 can still be sold for April forward and is a level I would recommend making sales.

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

November 12, 2020

 

Good Morning,

 

Weaker markets overnight as corn, soybeans and wheat trade lower. At this time corn is down 3 while soybeans and wheat are both down 5. The last two days have resulted in corn giving back half of Tuesdays gain.

Support levels on the CBOT for CZ20 are in the $4.02 to $4.05 range which looks a long way off at this juncture but still very much attainable. It might be worth pointing out that the supply situation, both inside the United States and globally, are unlikely to change much before January when the final production report for the U.S. is released and more information is known about South American crop prospects. Trades will be left to focus on demand indicators such as the pace of exports and ethanol grind, which is a bit of a mixed bag at present. Exports remain incredibly bullish, but still only account for 18% of total demand even with the USDA’s record forecast. Ethanol grind is projected at the second lowest marketing year total since 2012-13 as margins continue to yo-yo between profitability and losses. Livestock prices are below long-term moving averages with a fair amount of anxiety hanging over the market as long as coronavirus-related restrictions remain a concern.

I am not going to predict where the market is going to be five minutes from now let alone 5 months from now, but producers are currently able to lock in some very good prices out into the summer months and should actively be marketing grain.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didionmilling.com

November 11, 2020

Good Morning,

 

Corn is up 2 and soybeans are up 7 to start the day. Yesterday’s report gave the markets a good boost which producers heavily rewarded by making very good sales for nearby thru fall of 2021. With the run up in board prices over the last couple weeks and locally better than expected yields we are starting to see nearby bids pulled from end users and basis weaken a bit in the deferred months as needs get filled. I would recommend that if you are going to need to sell corn in Q1 that you make some sales to lock in a great price and assure a space to move the grain.

 

Yesterday the USDA estimated US 2020 corn crop near 14,507 mil bu. Total 2020/21 corn demand is estimated near 14,825. This includes exports near 2,650. Carryout is now estimated near 1,702. This suggest corn prices may need to trend slightly higher to slow demand and help increase US 2021 corn acres.  The 1,702 carryout is a 11.5% stocks to use ratio. Historically the CBOT does not trade above $4.50 unless we see the stocks to use ratio below 9%. I am not saying this couldn’t happen, but we still have a lot to work thru to get to 9% and with COVID numbers and shutdowns around the world on the rise this number could easily go the other direction. Projections for average on farm prices for 2020/21 are $4.00.

USDA estimated US 2020 soybean crop near 4,170 mil bu. Total 2020/21 US soybean demand is estimated near 4,519. This includes exports near 2,200. Bean demand and carryout of 190 million bu. were the biggest market mover in grains on Tuesday. Projections for average on farm prices for 2020/21 are $10.40.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

November 10, 2020

 

Good Morning,

Markets are slightly higher this morning with corn up 3 and soybeans up 6. Yesterday’s announcement by pharmaceutical company Pfizer that it had a vaccine with early data showing it to be 90% effecive3 at preventing the coronavirus is giving the market hope that we may sometime in 2021 return to more normalcy.

The U.S. Corn harvest was reported at 91% complete (trade estimate 91%) versus 82% last week and 80% average.  The U.S. Soybean harvest was reported at 92% complete (trade estimate 94%) versus 87% last week and 90% average.
USDA is scheduled to release its monthly WASDE crop report at Noon EST today, including revisions to its domestic and global supply and demand balance sheets. The average trade guesses that are factored into the market include a 0.7-bushel drop in the corn yield to 177.7 bushels per acre and a 0.3-bushel decline in the soybean yield to 51.6 bpa. The greater focus of the trade will be on a) potential upward adjustments in USDA’s corn and soybean export forecasts, b) possible reductions South American corn and soybean production estimates due to early-season dryness and c) a potential increase in China’s corn import target after the USDA attaché in China recently raised his estimate of Chinese imports to 22 million metric tons.

 

USDA 2020/21 Corn and Soybean Production (billion bu)

November Est. Average Est. October Est
Corn Production 14.507 14.659 14.722
Corn Yield 175.8 177.7 178.4
Soybean Production 4.170 4.251 4.268
Soybean Yield 50.7 51.6 51.9

 

USDA 2020/21 US grain and soybean ending stocks (billion bu)

November Est. Average Est. October Est.
Wheat .877 .881 .883
Corn 1.702 2.033 2.167
Soybeans .190 .235 .290

 

Have a Safe Day!

 

Garry Gard