December 1, 2020

Good Morning,

After yesterday’s fund selling with month end profit taking the markets are steady this morning. Markets are neutral to start the day/month with corn unchanged and soybeans up 3. On Monday, Managed funds were net sellers of 13,000 contracts of Wheat; 27,000 Corn; 17,000 Soybeans. Funds are now net long 8,000 contracts of Wheat; long 257,000 Corn; net long 214,000 Soybeans.

November was a good month in the grain markets with corn closing $.23 cents higher and soybeans closing $1.12 higher. Rallies like this during harvest timeframes are rare but very welcome, especially for producers that were short on sales and space.

There is rain forecast for North and Central Brazil that starts on Sunday.  The amounts are .75-2 inches, which is still below normal for this time of year.  The models have been over-estimating rain totals for a month, showing heavy amounts coming in, with very little actually hitting the ground.  Mato Grosso rarely sees dry weather at this time of year and usually will receive 2-3 inches a week.  They may be moving back to a more normal forecast with the 10 day model run and the more into the 9th of December.

I look for the markets to trend sideways to lower during the month of December with South American weather, COVID-19 and Chinese cancelations in the drivers seat.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didionmilling.com

November 30, 2020

Good Morning,

Markets are lower to start the week and end the month. Corn is currently down 3, soybeans are down 18 and wheat is down 11. The overnight session started out higher with beans taking another stab at 12 dollars futures, missing with a high of 11.99 before falling back and settling lower in the early morning trade.  Corn futures traded up to 4.395, making a new high, but also failing and heading lower.  Just about every market is lower this morning, whether it be New York, gold or bonds. Even the US dollar is lower.

Russia may increase the size of its grain export quota planned for Feb. 15-June 30 to 17.5 million tonnes from 15 million tonnes, the agriculture ministry said.

There are rumors that China is preparing to allow another 5.0 mmt of work corn purchases via TRQ/GMO licenses.  China has been mostly absent recently for corn and new bean purchases, even cancelling and rolling out some cargoes to next year.

The bulls continue to talk about dryness in Argentina and Brazil, yet the weather models don’t quite back it up.  Mato Grosso is forecast to see .75 to 1.5 inches of rain in the next 10 days.  Argentina just received 1 to 3.5 inches of rain over the weekend.  Some heavy rains are forecast this week with up to 5 inches forecast in Eastern Brazil.  Temps will be between 80 to 100 degrees, depending on the placement of rain.  This forecast looks bearish, and am not sure we are trading weather anyway.

 

Looks like profit taking going into the end of the month for corn and beans. The weather forecast alone, should have prices down more than they are.  At some point this market is due for a bigger correction, and I guess we’ll know it when we see it. The market is dangerously long.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didonmilling.com

 

November 27, 2020

Good Morning,

Prices are called higher, but exports may produce a lower open in beans.  This is one of the few times of the year with no overnight markets.  US Stocks are up 80 and crude oil is down 50. A small two sided trade is expected today, with wheat most likely trading higher, bouncing off of Wednesday’s losses.  World markets are stable.

Export sales were 65.6 million for corn and 28.2 for soybeans. Corn was right at the 10 week average while soybeans were 50 million bu. below the 10 week average. Rumors of Chinese cancelations that have already been made has the markets on edge the last few days.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didionmilling.com

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