August 4, 2020

Good Morning,

Markets are sharply lower this morning with corn down 5 and soybeans down 9 and wheat down 8. Last night’s crop conditions ratings from NASS showed the nations corn crop at 72% G/E compared to the five year average of 66%. 92% of the crop is in the silking stage while 39% is in the dough stage. Soybeans came in at 73% G/E with 85% blooming and 59% setting pods. All of these are ahead of the five year average.
StoneX (FC Stone) estimated that the corn yield would be a record 182.4 bpa and beans a record 54.2 bpa. If realized the corn yield would add more than 325M bu. and 365M bu. in bean production to the balance sheets. For corn that would mean that it’s carryout would top 3B and beans in excess of 700M bu. While the corn estimate was 2% over trend, the bean estimate was nearly 9% over trend and an outright bearish figure.

Hand Sanitizer – Didion has hand sanitizer available in large containers (55gal drums). If you or your business is in need or you know of someone who could use larger quantities, please contact Garry Gard at 920-348-6844 for more details.

Have a Safe Day!

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

August 3, 2020

Good Morning,

Corn is unchanged, soybeans are mixed and wheat is off 10 to start the week and month.
The soap opera continues as the Trump administration’s threat to ban TikTok, the viral teen phenom, and other Chinese-owned apps could significantly hamper their access global user data, which is an immensely valuable resource in a modern internet economy. Any US decision, which Secretary of State Pompeo said would come “shortly,” is likely to be followed by a similar pressure campaign that prompted some allies to ban Huawei.

This will surely raise the tensions between the US and China leading traders to debate whether or not it will have an impact on the Phase 1 trade deal.

Corn and soybean crop ratings are expected to hold steady or even possibly gain a tad after last week’s rains across the southern half of the Midwest and Delta. Those rains could prove especially significant for soybeans where the rains would produce the most benefit.

Have a Safe Day!

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

July 28, 2020

Good Morning,

Prices are sharply lower this morning with corn down 5, soybeans down 14 and wheat down 6 on better than expected crop ratings in yesterday afternoons report.

Despite ratings slipping in Iowa, the recent rains helped boost ratings in Illinois, Indiana and Ohio. NASS pegged crop ratings for both corn and beans at 72%. Yield estimates for corn, beans and spring wheat are on the rise and traders know that the feedback farmers are providing now will be the data included in August 12th crop report.
The historically high ratings indicate a yield potential that is some 5% higher than trend and puts corn yield in the neighborhood of 184-187 bpa and the beans anywhere from 51 to 52.5 bpa. Yields of that magnitude will add substantial bushels to the 2020 production potential and ultimately ending stocks. We have to remember that for every bushel above trend adds nearly 85M bu. to the balance sheets of both.

Traders will continue to monitor the situation with China to see if they look to purchase any soybeans on the pullback in the market. With any supply issues off the table for moving the market higher, the CBOT is now in a position of finding prices that help improve demand which means lower prices!

With a higher quality crop on the horizon, there has been a lot of talk about end users and elevators adjusting discount schedules for the new crop to discourage producers from delivering old crop(2019) on new crop(2020) contracts. Higher Test Weight, Foreign Material and Damage discounts are expected as they don’t want to deal with the poor quality the 2019 crop gave us. Farmers with old crop bushels have basically run out of time and need to empty out the bins ASAP.

Have a Safe Day!

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

July 27, 2020

Good Morning,

Corn is down 2 and beans are up 2 to start the week. Some support in the bean markets as rising prices in China helped to underpin the markets. Corn in Dalian (Major port city in China) was up $0.17 and soy meal was up $6.70. However, the strong gains have traders questioning if we will continue to see the Chinese continue with their large orders like we saw last week. There are a couple of theories as to why Ag prices are rising so quickly in China. The first is that their grain demand is just better than expected after flooding in the far southern parts of the country has damaged stored supplies. The second is that with political tensions between the US and China rising once again that Beijing will pull back on its Phase 1 commitments and leave China with a tight supplies between now and when the South American harvest begins in January. In June, China imported a record 11.2 MMT of soybeans (mostly from Brazil) and corn imports were up 25% as well. Normally we would see these massive influx of beans going to state reserves, but it appears as though the Chinese are in need of more feed grains. The rise in corn looks to be mostly speculative with Chinese farmers expected to begin harvesting there in another 6 to 7 weeks.
I would not recommend chasing any potential rallies in the market and advise producers to get sales on the books ASAP. The political rhetoric between the US and China is heating up again and could devastate prices even more. With a big crop on the horizon for the US and COVID numbers continuing to rise at an alarming rate the next ten days could be quite telling for prices for the balance of the year.

Have a Safe Day!

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

July 22, 2020

Good Morning,

Markets are mixed with corn up 1, beans down 3 and wheat up 1 cent to start the day. Grain markets are trying to bounce back while beans are struggling a little due to the favorable weather outlook and new political turmoil with China.

China vowed retaliation after the U.S. forced the closure of its Houston consulate, prompting stocks to fall in one of the biggest blows to diplomatic ties between the two countries in decades.
The US government gave China 3 days to close its consulate in America’s fourth-most populous city in an “unprecedented escalation,” A Chinese Foreign Ministry spokesman told a regular briefing Wednesday in Beijing. China planned to “react with firm countermeasures” if the Trump administration didn’t “revoke this erroneous decision.”
The State Department subsequently confirmed in a statement that it had ordered the consulate closed “to protect American intellectual property and Americans’ private information.” It said international agreements required diplomats to respect the laws and regulations of the host nation and not interfere in its internal affairs.
There really is no idea what form the Chinese retaliation might take, but I would assume that this is a direct threat at the Phase 1 Trade Agreement. To this point no plans have been set forth for Phases 2 & 3. China could very easily pull back on their US Ag purchases due to the rising political tensions.

Weather in the US suggests we will produce a big corn crop. Growers with old crop are running out of time. Longer term, there is the potential for export demand developing with a weaker $USD. But that is a story for 2021 & beyond and not going to help old crop or the 2020 crop that is looking bigger every day.

Have a Safe Day!

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

July 20, 2020

Good Morning,

Markets are mixed this morning with corn down 7, wheat down 15 and soybeans up 4. Favorable weather forecast is weighing on corn and wheat while soybeans are trading higher on hopes of additional Chinese demand.

Both the weather and Chinese demand are expected to be the main driving forces behind this week’s trading. The trade is looking to see another 1.5+ MMT of bean sales as Beijing looks to fulfill its Phase 1 pledge. This should be about how much they will need to secure weekly if there is any hope of them holding up their end of the bargain.

Corn and wheat are both suffering from burdensome supplies and offers into the export market that just are not competitive. The US Dollar has received a little help from the EU overnight as they appear ready to unveil a new stimulus package for their economy.

Global infections of COVID-19 will top 15M this week with US cases easily surpassing the 4M mark. The global mortality rate is now 4.2% with the US sitting at 3.7%. Regional hot spots have local politicians threatening new “stay at home” orders. Florida’s COVID-19 outbreak is “totally out of control,” according to a Democratic representative, and the mayor of Los Angeles said his city is “on the brink” of new restrictions, comments that suggest the country’s months of trade-offs between the health of the community and the economy are far from over.

Look for a 1 point bump when we get a look at crop ratings this afternoon. With the weather forecasters still calling a progressive pattern that holds the possibility for daily showers/storms, this should be easily attainable. Seasonally cool temperatures are expected this week before things begin to heat up again heading into the weekend with highs in the low to mid-90’s expected. This weather pattern is setting us up for a much larger crop than the USDA has been projecting.

Time and weather are stacking up against anyone sitting on old crop corn left to sell and new crop sales that need to be made. We are only a couple weeks away from new crop corn hitting the pipelines as it will begin in the south. This is going to put more pressure on old crop prices as supplies increase. Ethanol margins have dropped dramatically over the last two weeks which could reduce plants rates as driving demand backs off.

My advice to producers is to find a home for your old crop corn and new crop corn that you are unable to store.

Have a Safe Day!

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

July 15, 2020

Good Morning,

Markets are steady in corn, up 1 in beans up 3 in wheat. Hopes of additional soybean sales to China are on traders minds. However, traders will have to balance any enthusiasm with the favorable weather outlook for the central US.

This morning private exporters reported to the USDA export sales of 389 TMT of soybeans for delivery to China during the 2020/2021 marketing year and sales of 132 TMT of corn for delivery to China during the 2020/2021 marketing year. We hope this can continue.

President Trump has signed legislation that would hold Beijing accountable for its oppressive actions in Hong Kong. The President went on to suggest that he has no interest in negotiating a Phase 2 agreement. This raised a few eyebrows and calls into question his commitment to the Phase 1 deal. Tensions are high between the two nations and traders around the world are concerned that either President Trump or Chinese President Xi could pull their support from the Phase 1 deal at any moment as political retaliation.
Weather forecasts continue to look favorable for most of the Midwest as crop progress rolls along.

Fall corn is back below $3 and may not move higher without some major news. Less than a week ago we were in the $3.20+ range and some producers got sales on. This may be the best numbers we see thru the end of the year. My advice would be for everyone to get sales on the books and firm offers in place.

Have a Safe Day!

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

July 13, 2020

Good Morning,

The markets are trading lower to start the week with corn down 8, beans down 9 as it appears it will be another active week with the weatherman garnering a good portion of the attention. Today’s forecast is much less threatening to yield estimates than it was last week.
Beijing has made a symbolic move against the US overnight by placing financial sanctions China announced the details of its
promised retaliation against the US for its sanctions over Xinjiang, sanctioning American officials and senators on Monday in the latest tit-for-tat confrontation in their deteriorating relations. Chinese foreign ministry spokeswoman Hua Chunying said the behavior of US officials and politicians had severely damaged China-US relations, and should be condemned.
Less threatening weather, along with rising Chinese tensions and COVID figures will weigh on markets here today. Corn stocks at 30 year highs will continue to pressure prices.

Have a Safe Day!

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

July 10, 2020

Good Morning,

Corn and Beans are both relatively quiet before this morning’s report.

The USDA has a monthly report coming in this morning at 11 AM. Below are estimates.

USDA 2020-21 U.S. grain and soybean ending stocks

USDA July  Average of          Range of USDA June
2020-21  analysts’          analysts’ 2020-21
end-stocks  estimates          estimates end-stocks
estimates estimates
Wheat _______    0.948               0.825-1.006       0.925
Corn _______    2.683              2.400-3.010       3.323
Soybeans _______    0.416              0.355-0.572       0.395

 

Yesterday saw a nice start to the day with corn up eight plus cents. This “run” was spurred on by a hot and dry forecast for some larger areas of the Corn Belt that are desperately needing rain. Of course this hot forecast always raises questions about a successful pollination. Along with this, China auctioned off another large volume of corn this month from their reserves, with a 100% sale rate.

A reminder that we need to look at getting firm offers in place, these are working all trade hours and can capture the spikes in the market. Congrats to those that were filled yesterday in the morning, and look to start thinking about locking in old crop at $3.25 or higher, and winter consider offers of $3.45-3.50.

Have a Great Weekend,

Mitch Giebel
920-348-6861
mgiebel@didionmilling.com

July 2, 2020

Good Morning,

Markets are weaker to start the day with corn and beans down 1-2 and wheat down 3. Shortened trading today as the markets will close at noon. There will be no markets on Friday.

The USDA provided a ray of hope to farmers (at least temporarily) with Tuesdays report. Often these reports squash and rally, but this time they reversed course and gave farmers a marketing opportunity. The data from Tuesday suggested that PP enrollment was nearly half of what it was in 2019, so don’t be too surprised if NASS suddenly decides to put back in 1-2 million corn/bean acres on future reports in the August report and beyond. As I stated in yesterday’s comments, there are a lot of big questions in their numbers and producers should be actively selling before they get corrected.

With crops now entering their reproductive stages, the next 6 weeks are going to be all about the weather. The weather models are struggling to come up with a consensus on an outlook, but the EU model positions the high pressure ridge (HPR) further west keeping high temps not quite as warm as the GFS would indicate. Additionally the forecasts have had a difficult time predicting where the convective thunderstorms will pop up. If weather and forecasts over the weekend show rain and moderate temps come Monday, this market could begin to give back the last few day’s gains. If not we could see a little more premium as the Funds exit short positions.

Have a Happy Fourth of July!

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