September 8, 2020

Good Morning,

Markets are quiet this morning with corn and soybeans both hovering around unchanged following the three-day weekend. The recent rally has given producers a good opportunity to market grain ahead of the upcoming harvest.
Friday we get a look at the USDA’s September Crop report. This will be one of the most important reports in years following the derecho event in Iowa coupled with the flash drought yield losses.
President Trump vowed to end America’s reliance on China. The President threatened to punish any American company that creates jobs overseas and forbid those doing business with China from winning any federal contracts. The worsening political rhetoric has the pros wondering if Beijing will fulfill it pledges on purchases for the Phase 1 trade agreement. China has been a sizable buyer of US beans, corn and even wheat, but continue to lag on other Ag products, manufactured goods and energy. Money managers will likely pay close attention to this situation to see what China’s reaction to President Trump’s new hardline stance is.
The weather models are in agreement as they offer consistently cool/wet outlook for this week. Extended forecasts show some warming and drying out next week. In the meantime low temperatures will dip into the mid to lower 30’s across North Dakota and far northern Minnesota tonight. Otherwise there is no frost event on the radar that would lead to a premature end to the 2020 growing season.

Have a Safe Day!

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

September 2, 2020

Good Morning,

Markets are unchanged in corn and up 2 in soybeans to start the day. The volume of trading was down from the previous two overnight sessions as concerns over crop yields fades and traders look to bank some profits from the recent rally. Chinese demand is a must for the price levels to hold.

China has been actively booking corn out of the US over the last two weeks. Based on the size of the purchases the past two days it suggests that it is Sinograin/COFCO rather than individual buyers. Exporters report that the corn is being sold for February/March shipment out of the Gulf. Unfortunately this appears to come at the expense of the soybeans which has seen their pace slow. The review of the Phase 1 trade deal now has passed with all parties agreeing that China is working to fulfill its pledge. China already has large volumes of corn and soy purchased through December.

After letting the duty-free ethanol imports from the US expire yesterday, Brazil and the US have tentatively worked out a deal to extend the duty-free imports for another 90 days. No new demand is expected as the margins are currently negative to import US ethanol, but the deal buys the Brazilians time to see who wins the election as well.

Informa is expected to release their corn and soy estimates this morning.

Historical charts and trends tell us that the market has put in its high and we could start to slide into late October before we will see a bounce.

Producers should continue to make new crop sales at current levels for any space needs as harvest pressure will be working its way north in the coming weeks.

Have a Safe Day!

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

August 28, 2020

August 28, 2020

Good Morning,

Corn market down 1 and soybean up 5 this morning as traders look to consolidate this week’s gains heading into the weekend. It has been a good week in the markets as we have traded higher 4 of the 5 days in corn and 5 of 5 in soybeans. Export sales of corn and soybeans to China and unknown destinations along with dry weather (not here!) have added premium to the markets short term.
While I don’t believe the markets are going to crash short term I would advise producers not to become too bullish as there is still a huge crop in the country even with lowered yields.
Below I have put together some scenarios showing what our stocks to use ratio could look like based on lower yields than currently projected. The USDA is currently using 181.8 bpa and Pro Farmer came out with a 177.5 bpa last week. As you can see either one of these results in a huge carryout. In order for us to get a stocks to use ratio below 10% (historically what we would need to see corn near $4/bu) we would need yield to drop below 165 bpa which is below last year’s yields.

Have a Safe Day!

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

August 24, 2020

Good Morning,

We have a positive start to the week with prices up in corn and soybeans. Rumors that the Chinese were sizable buyers of US soy/grain late last week are adding to hopes for additional sales to China this week.

The stock markets are being helped to those new all-time highs on news that the FDA has approved and will expand their blood plasma treatment program in an effort to fight the COVID-19 outbreak. The announcement came as Republican’s kick off their parties convention and Federal Reserve’s Jackson Hole economic conference. Both will be heavily scrutinized for any signs of policy changes.

Traders will be watching closely to see if corn and bean futures are able to penetrate last week’s highs with rains for much of the Corn Belt in the forecast for later this week. For the first time ever it looks like two hurricanes (Marco and Laura) will make landfall in the Gulf at the same time. This will provide widespread chances for meaningful rains across much of the central US. The rains will go a long way towards stabilizing the crop condition ratings.

The bulls will do what they can to maintain upward momentum on prices heading towards the end of the month and the start of harvest. Be on the lookout for late week selling should the rains materialize.

Have a Safe Day!

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

August 21, 2020

Good Morning,

Markets are mixed with corn up 1 and soybeans down 1 as rumors of Chinese demand for US beans and wheat continue to circulate. The talk of China securing additional grain and soy have been making the rounds all week and there are some indications that China has been active in the cash markets overnight.
China has begun securing soybeans out of Brazil for 2022 as the Chinese see a good value in securing supplies from the Brazilians way out. Brazilian farmers are able to lock in some excellent margins exceeding 50% over their variable costs with the Real struggling. The profitable margins will have them seeding their spring crops fence row to fence row when the planters get rolling next month.

Pro Farmer will release its corn yield estimate later today. The Tour has helped reassure the trade that the US summer row crops will be large when the combines begin rolling next month. However, rains will be necessary to put the finishing touches on this year’s crops.

Have a Safe Day!

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

August 19, 2020

Good Morning,

Markets are lower again overnight as they monitor the Pro Farmer crop tour results and talks or lack there of with China.

Pro Farmer estimated Nebraska corn at 175.1 bushels per acre, up from 172.5 last year and above the 3 year average of 172.4. Bean pod counts were 1,298 pods vs 1,211 last year and above the 3 year average of 1,213.

Indiana corn yield was 179.8 bushels per acre vs 161.5 last year and above the 3 year average of 171.7. Beans pod counts were 1,281 vs 923 last year and again above the three year average of 1.135.

Pro farmer will move through Illinois and Iowa today. They will catch some of I-80 where much of the damage has been done. In Illinois, their path should be through some of the best corn, missing much of the Northern third of the state that has had very little rain in the last 10 weeks.

President Trump has indicated that the US will not meet with China on a 6 month review of the trade deal. Ag sales are on pace, energy is not. With the slowing economy, it would have been impossible for anyone to need a substantial amount of energy, let a long a major increase. China is not looking to secure ethanol as a blending mix for gasoline, instead targeting crude oil, when circumstances return to more normal.

Have a Safe Day!

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

August 14, 2020

Good Morning,

Markets are lower today following yesterdays surge in the markets.

Uncertainty over supplies and fund short covering have led to the recent rally following the USDA’s WASDE report. The trade is still debating the damage from Monday’s derecho and the FSA acreage data have left many unknowns regarding the 2020 corn and soy crops. Traders have begun to price in the FSA farm Program participation data that showed 9M acres were enrolled in PP with nearly 5.4M being corn and 1.2M for beans. This was a 5M acres decline from the seeding forecast provided by NASS in March. Of the nearly 9M acres, the decline was led by the Dakotas that saw a 2.6M acres decline followed by a combined 1.3M loss in the southern Midwest and Delta for Louisiana, Mississippi and Arkansas.

I would caution reading into this too much as 2020 has been a less than normal year to say the least. Initial FSA data that comes out in August is often difficult to assess. Given that there was no penalty for farmers who enrolled late this year, comparing this year to any other years data would be difficult at best.

The total acres enrolled in the US farm programs totaled just 226M acres. This was down some 7M acres from last year when the horrendous weather last spring made enrollment a hot topic. But what is most glaring is the 19M drop from 2018’s figures. If PP acres are included this year’s totals enrollment in 2020 is off more than 17M from last year. In my opinion it is too early to make any fast judgement of the NASS data until we get a more information from them in September/October. NASS is not expected to update their numbers on 2020 planted acres until the October report.

With that said we still have the largest corn stocks in 33 years with both ethanol and feed demand overstated. Now there is a gap in the charts in December corn up at $3.42 that is a likely target, but there should be some decent resistance in that area given the enormous carry out possibilities.

Bottom line is that producers should reward the recent rally by making new crop sales! This crop is not getting smaller and prices will fade heading into harvest.

Have a Safe Day!

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

August 13, 2020

Good Morning,

Markets were higher overnight with corn up 6 and soybeans up 10. Concerns over a dry LH August and ideas that China has more to buy is moving the market today.
The USDA pegged the 2019/20 corn carryout at 2.228 billion bu. The 2020/21 carryout is expected to be 2.756 billion bu. They increased the corn yield to 181.8 bu/ac vs last months 178.5 bu/ac. The USDA estimated new record corn yields in Minnesota, Wisconsin, Michigan and South Dakota.(WI is projected to be 181 bpa. The USDA did acknowledge the yield estimate in the
Midwest may be already obsolete as it prefaced the report with a statement that all estimates
were prior to the storm that crossed the US a couple days ago. The trade is onto speculating how much yield can be trimmed from the IA/IL region as part of the wind damage. Derecho discussions continue with how much crop was lost to the high winds. Iowa’s Ag Dept. said that 10 mln acres of Ag land was “affected” by the winds. Of the 30 mln acres of Ag land in Iowa there are 13.5 mln corn, 9.3 mln soy, and 1 mln hay. Only the corn crop was really affected in any way. Declarations like this usually precede requests for Federal funds. By no means is this much of an estimate of actual damage to the crop. “Pro”Farmer starts its Midwest “virtual” tour August 17th which should shed some light on the damage. The real answer will not be known until the combines hit the field this fall.
The 2019/20 US soybean carryout was estimated at 615 million bu. while the 2020/21 carryout is expected to be 610 million bu. WASDE projected soybean yields to average 53.3 bpa compared to 49.8 last month. Record yields are expected in Nebraska, South Dakota, Missouri, Indiana, Michigan, Illinois and Ohio.
The biggest surprise to me was that they increased feed usage by 75 million bushels to 5925. This 6% year over year growth assumes livestock consumption will exceed its normal per head usage due to a larger crop.

Have a Safe Day!

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

August 12, 2020

Good Morning,

Report Day!

The USDA will release their S&D estimates at 11 am today with the expectations for larger corn and soybean yields due to favorable weather. Estimates are listed below and will be updated shortly after the report’s release.

USDA Production (Billion Bu)
USDA August Ave. Estimate USDA July
Corn Production 15.278 15.174 15.000
Corn Yield 181.8 180.5 178.5
Soybean Production 4.425 4.254 4.135
Soybean Yield 53.3 51.2 49.8

2019-20 US ending stocks (Billion Bu)
USDA August Ave. Estimate USDA July
Corn 2.228 2.271 2.248
Soybeans.615 .617 .620

2020-21 US ending stocks (Billion Bu)
USDA August Ave. Estimate USDA July
Corn 2.756 2.80 2.648
Soybeans .610 .524 .425

Monday’s Derecho storm potentially impacted some 10 million acres (4 million hectares) of Iowa farmland and millions of bushels of grain storage in the top U.S. corn growing state, Iowa Agriculture Secretary Mike Naig said; early estimates show that tens of millions of bushels worth of commercial grain storage – as well as millions of bushels of on-farm storage bins owned by producers – were either impacted, destroyed or severely damaged by the storm. Unfortunately these “potentially” damaged acres has not affected the markets at all. Maybe we will see some impact long term but for the time being the markets are content with this year’s potential crop.

Have a Safe Day!

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

August 11, 2020

Good Morning,

Markets are a little higher to start the day with what looks to be some short covering ahead of tomorrrow’s report. Corn is up 3 and soybeans are up 2.
Crop ratings last night dropped 1% to 71 percent good to excellent for corn. Beans increased 1% to 74% good to excellent on of the highest ratings on this date ever. Nass ratings suggest corn and bean yields at 5 plus percent above trend. Some expect a major increase in yield on tomorrow’s crop report. WASDA will use some combinations of vegetative grow and average ear weights. FSA will also release acres that have been certified this year tomorrow. We will get to see from year to year data changes. Prevent plant acres will also be in the report.

Trade average guess for the US 2020 corn crop is 15,170 mil bu with a range of 14,915-15,401. The average trade guess for US 2020 beans are 4,258 mil bu with a range of 4,135-4,399. Average trade guess for wheat is 1,833 mil bu with a range of 1,799-1,856.

The average guess for corn carry out is 2,800 mil bu with a range of 2,622-3,061. The guess for soybeans is 525 mil bu with a range of 430-689. The trade guess on wheat is 947 mil bu with a range of 899-1011.

Get your sales made and firm offers in place ahead of tomorrows report. Expectations are for the markets to continue to trend lower with a big crop on the horizon.

Have a Safe Day!

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