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

June 9, 2020

Good Morning,

Markets are lower this morning with corn and soybeans down 3 and wheat down 5.
Last night’s planting and crop progress report showed the US corn crop 97% planted and 75% in good to excellent condition. Soybean planting progress came in at 86% planted with 72% of the crop rated in the good to excellent category. Some areas of IL and IN that received heavy rains in May are busy replanting and experiencing erratic stands that will be interesting to watch conditions on over the rest of the summer. Unfortunately these areas are too small to have a bullish impact on the market. With old crop corn carryouts expected to be in the 2.1-2.3 billion bushel range in Thursdays report and this years crop off to a great start for the majority of the US prices will struggle.
The funds have been short over 200,000 contracts for close to a month now as they closed yesterday with an estimated 266,000 short position. Some traders believe we will see some short covering in the coming weeks to set up another selling pattern after we get into mid-July to early August. I do not look for that short covering position unless we get a weather issue in the next couple weeks. I look for the funds to hold on to their short position well thru new crop.
Traders will be monitoring rain totals this week from the Tropical storm that is moving thru the central US. After this remain event there is almost no rain in the forecast for the next 15 days with warmer temperatures. This looks to be ideal for growing conditions.

Producers should be making sales of old and new crop corn ahead of Thursdays report and should be making plans to have significant sales on ahead of the July 4th weekend.

Have a Safe Day!

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

June 8, 2020

Good Morning,

Soybeans and wheat are down two while corn is up 2 this morning.
Corn has made small gains in the past few days, but it’s mostly just been a change in the spread and the position the funds hold. The funds will likely remain short corn unless the weather changes, just not as heavy. Ethanol production is picking up and crude oil has traded to 40 dollars a barrel. Prices don’t need to be at 3.20 vs July, but it’s up the funds at this point.
China’s soybean imports were 9.4 mmts for May, up 2 mmts from last may at 7.4 mmts. China is expected to buy similar amounts in June and July, with much coming from the US. The demand picture for beans is pretty good, as this is the most beans China has ever taking in this time period.
Crop ratings will be out later today, and they are expect to increase again. Corn should come in close to 75% good/excellent and beans should be 72% good/excellent. The USDA should also say that most all of the crop is planted as well. The crop survey on acres for June may actually have a chance of being half right for once due to the weather we have had this spring.
Look for the markets to continue to trade sideways this week heading into the USDA report on Thursday. Thursdays S&D report is not expected to help the markets. If the Funds reduce any of their short position ahead of this report, producers should take advantage of the market gains and make sales of old and new crop corn!

Have a Safe Day!

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