July 1, 2020

Good Morning,

June went out like a LION and July has entered like one as well in the grain markets. This morning corn is up 7 and soybeans are up 9 at the time of this writing. Both are off of their highs by about 5 cents from earlier this AM.
Yesterday’s USDA report added some life to the markets when corn planted acres came in roughly 3 million acres below the average estimate and more than 4 million below the March report. Soybean acres came in roughly 1 million acres below the average estimate and slightly above the March report. Quarterly stocks came in 273 million bushels above estimates for corn and 6 million bushels below estimates in soybeans.
There are a lot of questions in yesterday’s report that will have to be answered in the coming months. The biggest question I have is where did more than 7 million acres go? In 2018 the US planted 319 million acres to all crops (corn, beans, wheat, sorghum, oats, barley, rye, peanuts, peas, etc.). In 2019 we planted 302 million acres(wet weather and a lot of prevent plant). This year we planted 311 million acres to all crops in what has been the best spring for planting the US has had in several years. When looking at the March intentions vs. the June revisions by state the following states jump out:

North Dakota down 1,400,000
Nebraska down 800,000
South Dakota down 800,000
Illinois down 500,000
Minnesota down 300,000

Of these numbers North Dakota is the only one that I can buy. They had wet weather all spring/summer long and struggled to get the crops in. The rest of the states unplanted numbers are too high in my opinion based on producers/buyers/traders that I have talked to from these states.
Yesterday’s report showed that corn stocks in all positions totaled 5.22 billion bushels on June 1, 1% higher than a year ago. On-farm stocks were 3% higher year over year at 3.03 billion bushels while off-farm stocks were 2% lower year over year at 2.20 billion bushels. The indicated disappearance of 2.73 billion bushels from March-May was 20% lower than the same period last year.
While the acres are a mystery, they have given the producer an opportunity to sell levels that less than 24 hours ago we didn’t think were obtainable. Producers should not lose sight of the fact that we are seeing the best prices since the Middle of March when the pandemic hit. Yesterday’s stocks report was bearish and weather will be the market mover for the coming weeks. Even if the USDA does not make an adjustment to acres later this summer/fall, 92 million acres is still the 5th largest planting we have ever had. Next week’s WASDE report is most likely going to give us a 2.7-3.0+ carryout for next year which is not conducive to prices moving higher. I think we are seeing some short covering and may continue to see that for a day or two, but long term these prices need to be taken advantage of. We are only a government move away from these markets crashing back to the lows seen in early May if/when states decide to shut-down again.
Reminder that the markets will close at noon tomorrow and not re-open until Sunday night.

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

June 29, 2020

Good Morning,

Markets are mixed this morning with corn up 4 and soybeans down 1. Traders are preparing for tomorrows reports and a holiday shortened week. Tomorrow at 11am the NASS stocks/seeding report will be released which will give us the final acres planted for this year. Expectations are slightly below the March report for corn and up for soybeans. The average corn acreage guess is 95.2 million acres vs. 96.9 in March and 89.7 in 2019. Soybean acres are estimated at 84.7 million acres vs. 83.5 in March and 76.1 in 2019.
The stock market is higher this morning as trader’s debate whether the rising number of Covid positive tests will lead to the FED providing additional stimulus money. Further economic weakening is expected as the coronavirus infections spike both here in the US and around the world.
A normal weather outlook is forecasted for the next two weeks. Fortunately the driest period appears to be over the 4th of July weekend when a high pressure ridge settles over the Midwest. Extended outlooks offer near normal rainfall as well as moisture pulled up from the Gulf. Any extreme heat will be limited.

Todays “fund short covering” rally in corn will be short lived if the USDA reports come in as expected tomorrow. Make sure you are making sales on this short rally and get firm offers in for new crop sales.

Have a Safe Day!

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

June 25, 2020

Good Morning,

Markets are getting hit hard this am with corn down 8-10 and soybeans down 7. Favorable weather forecasts for a warm and wet July are weighing on the crops and outside markets are worried about the rising number of COVID cases leading to a second slowdown in consumer demand.
Over 34,500 new COVID-19 cases were recorded yesterday. This fell just short of the previous record set back on April 24th when New York was in the midst of attempting to control the outbreak there. Both Texas and Florida each hit new records as officials begin to fear that hospitals there could soon be overwhelmed. This has led to Disney delaying the opening of their theme parks in Florida. Elsewhere, Nevada’s Governor has ordered that the public are required to wear masks when they go out. This is a rather predictable disturbing turn of events and we suspect that the next two-weeks will be key.
The potential second wave is proving problematic for public officials across the country who had hoped the disease would subside seasonally like the flu. However, it does not appear to be that type of situation and that COVID outbreaks can just pop up and explode. This is not good news for the hospitality and food service industries who had hoped to get things back on track.
Producers should actively be making sales now for any crop they have to move this fall. The CBOT has no reason to rally and I expect basis levels will widen out with the lack of space to store this year’s crop. My opinion is that while prices may look bleak now, just imagine what they could be this fall with a huge carryout from 2019, a huge crop in 2020 and the strong potential for a second wave of COVID shutting down the country again. $3 corn could look like a great price!

Have a Safe day!

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

June 24, 2020

Good Morning,

Markets are mostly higher with corn up 3, beans up 1 and wheat unchanged this morning. With only 4 trading sessions remaining between now and the NASS Quarterly Stocks/ Seeding reports I expect to things trade sideways with rallies limited by the favorable weather outlook.
Beijing continues to demand that both US and other major exporters sign coronavirus-free certifications on any meats/ grains shipped there. Tyson Foods has said that they would be willing to offer such certifications in an effort to stave off large losses while other US exporters still refuse. In reality these affidavits lack scientific merit and the precedence they would set would be an unfortunate turn of events as the World economies try to return to normal.
US corn exporter’s face an uphill battle with corn out of the Ukraine and South America both trading at a discount to corn originating out of the Gulf. The Argentine discount to the Gulf continues to widen with them offering corn at 45 over the board as compared to 88 cents over the Gulf. Brazil is running 15 cents cheaper than the US supplies.
Crude oil prices are pulling back better than 1% this morning following a private sector report from the American Petroleum Institute late Tuesday showing a 1.75 million-barrel build last week. Traders are concerned that rising global coronavirus cases might slow the recovery pace, even as shuttered U.S. production starts to come back online.

Same old story – Lack of demand, favorable weather and lack of any political news to move these markets higher. Unfortunately I think this is what producers should expect for the next 12 months given where things are at and headed.

Producers should actively be making sales now for any crop they have to move this fall. The CBOT does not have a reason to rally and I expect basis levels to widen out with the lack of space to store this years corp.

Have a Safe Day!

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

June 23, 2020

Good Morning,

Futures were down sharply in overnight trade. Corn had been down 8 cents and beans down 14 off of comment that came from US Presidential Aide Peter Navarro. Fox news reported that he said the US Phase One deal was over. President Trump was quick to take to twitter, saying that the trade deal was fully intact, stabilizing stocks and crude oil.

Corn and beans have not recovered the full extent of the losses, and I would blame rain on the radar as the reason. Corn is currently down 4-6 while soybeans are down 1-3.

China is really going to need to pick up the pace of buying if they expect to get to the 36.5 billion dollars in purchases. Time is running out and it is going to get harder for us to make sales the longer this goes. I believe the window for bean purchases will come in late July to early August, but feel that corn may not come at all. China is now having exporters sign paperwork guaranteeing that the soybeans shipped do not contain the Corona Virus which is making many exporters balk at sales.

The window for any weather premium in the market is quickly closing with no major issues to date and forecasts looking very good. Producers should finish selling old crop and get more new crop sales on the books for grain you need to move at harvest.

Have a Safe Day!

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

June 19, 2020

Good Morning,

High-level meetings between Secretary of State Pompeo and a Chinese Communist Party Politburo Yang in Hawaii yesterday were productive. Pompeo was able to secure new assurances that China would still comply with the Phase 1 trade deal and its associated Ag purchases. Beijing promised to accelerate the purchases of US Ag goods going forward.

Rumors are that China was seeking offers on ethanol, HRW wheat, soybeans and corn following the meeting in Hawaii. While it always nice to hear that export business with China is encouraging, at this point, the demand will have little impact near-term on the longer-term oversupply issues we face.

Weather models look to be in good agreement in calling for a progressive weather pattern developing over the next 2 to 3 weeks as a series of high pressure ridge and troughs push east. Fortunately, none of the ridges look to be particularly strong and with all the moisture moving up from the Gulf will provide daily chances for showers and storms through the 4th of July holiday.

The rumors of Chinese demand are helping to support prices. I do not recommend chasing any rallies at this point due to the favorable weather outlook. Any rally should be rewarded with old and new crop sales.

Have a Safe Day!

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

June 15, 2020

Good Morning,

Markets are trading lower as spillover selling from the outside markets casts a shadow over the CBOT Ag complex. Corn is down 4, beans down 5 and wheat down 6 cents.

Trader are paying close attention to the price of gasoline as the US economy tries to shake off the COVID induced recession. Weekly gasoline disappearance will be of particular interest to the pros through the summer.

Traders are also interested in how the spread of the disease plays out in the other less developed countries of the world like Brazil and India. Brazil itself has seen total infections surpass the UK. Likewise in India, Doctors there continue to report that the number of new cases is continuing to steadily rise. The economic impacts of COVID will likely be felt in the world’s export markets as emerging market consumption growth is struggles over the next several months.

Crop ratings for Monday are expected to at least hold steady or gain a point in corn at 75-76%gd/ex. Bean ratings may jump a couple point to 73-74%gd/ex. Over the weekend I traveled a lot of central to southwest WI and saw some great looking crops. There are some areas where corn is a little uneven, but overall things looked great. Reports from a coworker who traveled from Kansas city to Cambria this weekend sounded about the same. The crop is off to a great start and this week’s heat along with a lot of the side dressing that is taking place will definitely make pop!

Have a Safe Day!

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

June 12, 2020

Good Morning,

Yesterday’s crop report showed very limited changes on the balance sheet. The USDA lowered 2019 production by 46 million bushels, and took out 50 million bushels of ethanol demand, making for a net change into new crop of 5 million bushels higher.

Soybean changes were also pretty minimal on the report. The USDA raised the crush 15 million bushels to a record 2,140 million bushels. Exports were lowered by 25 million bushels for a net increase in old crop stocks of 5 million bushels at 585 mil bu. New crop stocks were very close to trade expectations at 395 million bushels, with the USDA increasing the crush by 15 million bushels.

Look for mixed trade today, and with improved chances of rain coming, I don’t the market trying to rally today or anytime soon. My guess, we chop back into the middle of the range again, and the market fails at the end of the session. There is plenty of weather ahead, but today the forecast is bearish.

Have a Safe Weekend!

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

June 11, 2020

June 11, 2020

Good Morning,

Corn is up 2 while soybeans and wheat are down 2 to ahead of today’s WASDE report that will be released at 11am central time. Estimates are listed below.

2019/20 US Carryout (billion bu.)
USDA June Ave. Est. USDA May
Corn 2.103 2.150 2.098
Soybeans .585 .577 .580
Wheat .983 .979 .978

2020/21 US Carryout (billion bu.)
USDA June Ave. Est. USDA May
Corn 3.323 3.360 3.318
Soybeans .395 .426 .405
Wheat .925 .897 .909

Check back after 11am to today’s numbers.

Have a Safe Day!

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

June 10, 2020

Good Morning,

Markets are mixed this morning with corn down 3 while soybeans and wheat are up 2. Yesterday’s selloff in corn and soybeans was a result of Mondays planting progress and crop conditions report that has traders preparing for large carryouts this year. This will continue to be the story if weather continues to cooperate in the growing region. The past couple days moisture maps show that the tropical storm has been dumping adequate rain with limited areas receiving excessive amounts. Extended forecasts call for 10-14 days of warmer and drier weather followed by more moderate temperatures and rain.
Traders will await tomorrows report and continue to monitor weather updates here and overseas. The expectations for tomorrows report are for slightly increased old crop corn stocks with soybeans and wheat unchanged. I do not expect any changes in the new crop ending stocks as they will wait until the July WASDE to update those numbers to incorporate the June 30th acreage numbers. I also look for the June 30th report to carry more weight and volatility than we typically see.
In a statement yesterday, Goldman Sachs stated they believe commodity prices are too high. They don’t believe current corn and crude prices are sustainable with the loss of global demand and the massive oversupply in the corn market. They forecast corn prices to drop by 7.4% (.25 cents) in the next quarter which would put futures prices at $3.00 for the July contract and $3.15 for the December contract.

Be sure to get some sales made and offers in with your buyers soon!

Have a Great Day!

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