January 15, 2021

Good Morning,

 

For the first day this week the markets appear to be headed lower. Corn is down 3 and soybeans are down 12 to start the day. With a 3 day weekend on the horizon and funds holding a record long position we should expect some profit taking.

The US dollar has made a low over the past couple weeks awaiting whatever any new stimulus package may look like as the White House is in transition.

The weather forecast for South America is consistent with prior runs dropping some much needed rain in Argentina.  Totals were be .25-1 inch over the next 48 hours, with most of it falling to the North.  Western Brazil is going to see excessive rainfall where amounts will be up to 8 inches, causing flash flooding.  Central Brazil will see scattered showers over the weekend.  The important thing will be if Argentina has more rain in the forecast early next week.

The president of one of Brazil’s truck unions has warned in local media that upcoming strike action, scheduled for February 1, could be worse than in 2018 when national action over pay and conditions cut off essential supplies to major cities across the country.

The president of the National Association of Autonomous Transport (ANTB) Jose Roberto Stringasci was quoted in a number of Brazilian media outlets warning that the protest over rising diesel prices is gathering support and could be bigger than 2018.

With few major railways, Brazil is particularly reliant upon truck transportation to move goods around the country, with the previous truck strike quickly bringing the country to its knees.

This has lead to additional Chinese purchases of US soybeans as they have already been dealing with the delayed crop from South America due to weather.

Reminder there are no markets on Monday 1/18/21 as trade observes Martin Luther King Day.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

January 13, 2021

 

Good Morning,

 

Markets are mixed this am with old corn up 7, new corn down 5 and soybeans down 10. Yesterdays report was a shock to most, but when you look deeper into the numbers the corn market is about 50-60 cents too high given the final stocks number.

 

Most were talking about the yield yesterday for the big rally, but that answer is actually the stocks report for corn.  It should have been one of the most bullish stocks reports in the first quarter, and that was proven true yesterday.  Last year the Dec 1st stocks report was 11.327, keep in mind there were 20 million acres of prevent plant acres of corn, and less than stellar yields.  The average trade estimate had this stocks report coming in at close to 12.000 billion bushels.  The actual number can in 650 million bushels below at 11.322 billion bushels.  Poor crops, prevent plant and the largest first quarter export program of all time got us to here.  There will not be a quarter going forward with this much disappearance, shipping and using the crop this fast.  Exporters will not like the price jump, and probably buy only what they need.  Ethanol is going to have a really tricky time with margins, grinding corn into summer.  This looks like another slow down scenario for ethanol like we have seen several times over the year.  Bad economics, bad weather, and demand out of China have put the US in a position of overall low grain supplies.

Bottom line = Don’t expect these prices to be sustained as demand will disappear quicker than it came.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

 

January 12, 2021

January 12, 2021

 

Good Morning,

 

REPORT DAY!

 

Corn is unchanged this morning while soybeans and wheat are up 7 and 8 respectively.

 

Funds are estimated to be long 327,000 corn and 172,000 soybean contracts after yesterdays close.

 

The USDA report will rule the markets today and volatility could be extreme. Estimates for todays report are listed below. Check back after 11am for the finals.

 

USDA 2020 Harvested Acres (mln acres)

  USDA Jan 2021 Average Est. USDA Nov. 2020
Corn 82.5 82.543 82.527
Soybeans 82.3 82.305 85.289

 

USDA 2020 Yield (Bushel per acre)

  USDA Jan 2021 Average Est. USDA Nov. 2020
Corn 172.0 175.3 175.8
Soybeans 50.2 50.5 50.7

 

USDA 2020 Production (Billion Bushels)

  USDA Jan 2021 Average Est. USDA Nov. 2020
Corn 14.182 14.470 14.507
Soybeans 4.135   4.158   4.170

 

USDA 2020/21 US Carryout (Billion Bushels)

  USDA Jan 2021 Average Est. USDA Nov. 2020
Corn 1.552 1.599 1.702
Soybeans .140 .139 .175
Wheat .836 .859 .862

 

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

January 11, 2021

 

 

Good Morning,

 

Markets are starting off the week with corn unchanged and soybeans up 7 as traders prepare for tomorrows USDA report. The January 12th Crop Report is out tomorrow at 11:00. The USDA will update the supply and demand as well as the first quarter stocks.

 

On Friday the funds were net buyers of 15,000 soybean and 5000 corn contracts. Funds are estimated to be long 362,000 corn and 191,000 soybean contracts. The managed fund long position is near a record long. I expect this position will limit any significant move higher if tomorrows report is bullish as the funds already hold a significant long position. Combined corn, soybeans, soymeal, soyoil, Chicago, KC and MLS wheat commercial futures is near record 1,613,000 contracts.

 

Argentina has lifted a suspension on corn exports announced in December and will opt instead for a temporary 30,000 tonne daily cap on sales abroad. The agriculture ministry said in a statement in the early hours of Monday that it had struck agreements to guarantee the domestic supply of corn and cushion local prices against fluctuations in international markets, allowing it to end the full ban.

 

I believe we are nearing a top in corn, but think we may have a little more upside in the soybean market. The $14 dollar mark is a strong possibility on this run when looking at the retracement levels.  My guess is that tomorrows numbers will be neutral in corn (given the recent rally) and traders may do some selling ahead of the report. Volatility is going to be really high tomorrow.

Producers should be making sales of old and new crop corn and soybeans at these levels. Keep in mind there is a very large long fund position and the fact that 10 million acres of prevent plant will be going back into the market as we head to the March 31st planting intentions!

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

January 8, 2021

 

Good Morning,

 

Markets are firm again this morning with corn up 1 and soybeans up 11. Strength in the bean market continues to move all markets higher. Rumors of Chinese purchases for July and August shipments are propping the beans up this morning.

 

The forecast for Argentina has rains in the forecast this morning.  They should be getting rain from Sunday through Tuesday.  We should be getting a good idea if the forecast is a bust or not, about the same time the USDA is releasing the Jan 12th crop report.  This forecast has been wet in the morning run, and drier at mid-day for the last 5 days.  The rain forecast for Central Brazil, showed good precip, but not much came out of it this week.  Most of the heavy rains are to the East.

 

The market looks to hold steady into the weekend, with South American weather risk and the USDA crop report coming Tuesday.  Most Sunday nights have been higher, followed by fizzling market by Monday morning.  Rumors of Chinese purchases for July and August shipments are propping the beans up this morning.  These purchases are probably not rumor, as we are pretty sure they happened Wednesday and Thursday.

Have a Safe Day!

 

Garry Gard

ggard@didionmilling.com

920-348-6844

 

January 6, 2021

 

Good Morning,

 

Corn and soybeans are trading 4 and 20 respectively this morning.  Overnight March and May corn on the CBOT traded above $5 which was seen as a ceiling by many traders. We have blown thru all of the previous ceilings ($4, $4.50, $4.80) so it will be interesting to see if we can get a close above that level. With continued sales being made to China the markets are working to quell demand. The recent strength in the Chinese Yuan in relation to the US Dollar has made Chinese purchases easier. The strength in the Yuan is self inflicted by the Chinese government and is making this long term strength very questionable. Overnight Crude oil topped $50/bbl for the first time in close to a year which is positive news for the corn markets. This jump in oil was due to Saudi Arabia agreeing to cut oil production by 1 million barrels per day in the months of February and March.

I will continue to preach that producers need to be taking advantage of these markets as they are not sustainable. The markets are reacting as they should to curb demand and the inverses in the market show how quickly they are doing it.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

January 5, 2021

Good Morning,

Markets are stronger this morning with corn up 6 and soybeans up 29. Will todays trade be the same as yesterday? Yesterday was a wild ride, and today may not be much different. The markets were up these same levels yesterday before closing lower on corn and 1 higher in soybeans. If we are trading weather, the change to wetter in Argentina would produce a lower trade. I don’t know where we close today, but we are definitely in the volatility stage of the market. Trade gets nasty on highs and lows.
On Monday, Managed funds were net buyers of 2,000 wheat, net even corn, bought 5,000 soybeans. Funds are estimated to be net long 36,000 contracts of SRW Wheat; long 357,000 Corn; net long 222,000 Soybeans.
The forecast has a significant change to a wetter forecast for Argentina and Southern Brazil. The forecast into Jan 15 has the most rain forecast in months. Should this forecast hold true, this would be the crop saving rains that Argentina has been looking for. So far, most of the forecasts for Argentina have gone bust. A confirmation of the mid-day forecast and again tomorrow morning, may give traders a pause in the buying. Northern Brazil looks to get very good rains over the next 10 days which will help later planted crops. Some early beans are already being harvested, with yields down between 10 and 40%.

As I stated in yesterdays comments, this rally is not sustainable and producers should be making sales of old and new crop corn and soybeans. These are profitable levels for all operations and should be captured.

Have a Safe Day!

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

January 4, 2021

 

 

Good Morning,

 

Happy New Year! That’s definitely the way things are starting out this year with markets continuing their rally from late 2020. Overnight corn was up 6 while soybeans were up 28.

The Chinese currency in relationship to the US Dollar is the news this morning as these currencies are headed in the opposite direction. The weaker US Dollar and much stronger Chinese Yuan are making the Chinese buying power much stronger. The Yuan is managed by the communist party and they appear to be making a statement here as they are looking to import grains and meats from the world suppliers.

I do not see this recent rally as a positive for US producers long term because it is not sustainable. Higher prices result in rationed demand and this has already begun. Last weeks ethanol production and stocks report showed production down 42,000 bpd from the previous week and 132,000 bpd from 2019. We also saw stocks increase 14 million gallons from the previous week and 104 million gallons from the same time last year.

Producers should be actively making sales of old and new crop corn in the coming week before we get to the USDA report next week. This recent rally in the CBOT has and will continue to deteriorate basis levels across the country. No one knows where the end is, but my opinion is that we are very close to the top and could see a major setback in the markets. “High prices cure high prices”!

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

December 24, 2020

Good Morning,

 

Markets are calm this morning with the markets closing at 12 and most traders off for the holidays. Corn is up 1 and soybeans are up 3 at the time of this writing.

 

Chinese bean demand has been the catalyst for markets this week. China is expected to import more than 100 million tonnes of soybeans in 2020, a record high, said an executive with leading state-owned grains trader COFCO on Tuesday, as rebuilding of the country’s huge hog herd boosts demand for the protein. This has moved the needle on the bean market and thus pulled other commodities along as traders expect stocks to get even tighter in US soybeans.

 

The forecast for Argentina is wetter over the next 10 days, and the Southern Brazil forecast is much drier.  Rain totals in Argentina range from .5 inches to 2.0 on the model run.  If this hold true, it would be the best chance of rain in a month for Argentina.  The last forecast change failed to hold up, with only trace amounts falling.  The rain period is for Dec 26th-30th.  Northern Brazil with see normal rain into the end of December.  Temps are in the 100’s for Northern Brazil, and Argentina will be 80’s-90’s.

 

Funds are long 310,000 corn and 240,000 soybean contracts after yesterdays close. This is a signal that we could see some profit taking in the next week with month and year end profit taking.

 

Have a Merry Christmas!

 

Garry Gard

920-348-6844

ggard@didionmilling.com

 

December 18, 2020

Good Morning,

Overnight markets had corn unchanged and soybeans up 10.

Weekly corn export sales totaled 75.6 mb, the second largest week of sales for that date on record and sharply higher than the level needed weekly to hit the USDA forecast. Total commitments of 1.634 bb now account for 61.6% of the USDA’s estimate, the second highest ratio on record going back to 1990. The only area of the export sales report to raise an eyebrow at is the weekly shipments needed to hit the USDA mark which now stands at 60.4 mb. This would be a new record shipment pace from now through August with the second largest average program being 57.3 mb shipped per week in 2017/18. While Mexico was the largest buyer at 28.2 mb, China did show for 6.3 mb.

The well-followed firm Informa released their estimates for the January report and expect the USDA to cut their national average corn yield to 174.1 bushels per acre (bpa) vs. the USDA at 175.8 bpa in December. If demand estimates were left unchanged from the December WASDE, carryout would drop to 1.558 bb and a stocks/use ratio of 10.5%. This would be the tightest stocks/use ratio since 2013/14’s 9.2% but would still not support prices above $4.50 on the CBOT based on historical stocks/use ratios. The January USDA reports could prove to be some of the more important in recent history, especially depending on how South American weather fares the next 30-days.

With shortened trading hours and days in the coming weeks and traders on holiday and year end vacations, I would expect markets to trade sideways in the coming weeks. The interest and market movers continue to be South American weather and the January crop report.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didionmilling.com