Good Morning,

Markets are softer to start the day with corn and wheat down 2-3 and soybeans up 2.

Reuters released trade estimates yesterday for next Tuesday’s Planting Intentions and Quarterly Grain Stocks reports from USDA. The trade projects corn acreage to be 94.3M acres, soybean acreage at 84.9M acres, and wheat acreage just shy of 45M acres. Corn stocks are expected to fall 5.7% from March 2019 while soybean stocks are projected 17.8% lower than year ago. Both should be considered neutral/friendly

Valero announced that it was declaring force majeure at two of its plants (Albert City Iowa & Albion, Nebraska) that would allow them to not have to honor their producer price contracts for corn and DDGs made at both plants. Valero stated that all of its storage tanks are full and that it cannot continue operations.

Ethanol plants that are still running are seeing losses on the grind over $0.80 a bushel. This story will continue across the Midwest as the ethanol industry comes to grips with Americans who are driving less and a crude oil price war between Saudi Arabia and Russia.

The ethanol plant closures will certainly be problematic and make the uphill climb out of the basement here just that much more difficult for producers that are sitting on unpriced corn and a crop that will not store well. Add on the potential for a 94+ million acre crop that will be put in the ground in the next few weeks and things look bleak.

Have a Safe Day!

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

Good Morning,

Prices at the CBOT trading higher with corn up 3, beans up 1 and wheat up 4 cents. The US Dollar is down at 101.65 and crude oil is down $0.75 to $23.35.
The Trump administration struck a deal with Senate Democrats and Republicans on an historic rescue package that tees up more than $2 trillion in spending and tax breaks to bolster the hobbled U.S. economy and fund a nationwide effort to stem the coronavirus. The legislation was still being drafted but Senate Majority Leader McConnell said the Senate would vote on it Wednesday. It would still have to pass in the House before it gets to President Donald Trump’s desk.
For individuals the package provides direct payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child. Unemployment insurance would be extended to four months, the benefits would be bolstered by $600 weekly and eligibility would be expanded to cover more workers.
The coronavirus bill provides for $50B in funds to the CCC and directs the USDA to provide several avenues of relief to the American farmer including MFP payments and an aid program for US cattleman. Potential payment would likely dwarf last years payments as they essentially to farmers to “farm for the government.” Expectations are that the USDA will wait until after spring planting is complete before announcing any payments and how they will be distributed to avoid any distortions in planting intentions.
Cash markets will have to be watched closely today as China was reportedly inquiring about 250 TMT of US corn out of the Gulf. If the rumors are true it would push total Chinese purchases over the last week or so to 1.0 MMT and fulfill Beijing first allocation of duty-free import licenses.

Have a Safe Day!

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

Good Morning,

Markets are mostly higher as fears that US processing plants could close due to infections of the COVID-19 virus continues to rise. The infections could prove challenging as workers and truck drivers who potentially have contracted the disease cause a reduction in processing capacity. Most millers/processors have contingency plans they can put into place to keep plants running; however, many questions remain as to just how world supply chains and logistics will handle this situation as the spread of the virus continues to quicken.
Corn continues to struggle as the fall in crude oil prices weighs on ethanol demand. Besides the price war between the Russians and the Saudis, US ethanol will struggle with reduced domestic demand as American shelter in place and curtail their gasoline demand.
Beans are seeing strength after Chinese soy meal futures closed up the limit due to the tight supplies as livestock producers there restock their feed needs. Prices there are getting a boost from the policy that any vessel offloading soybeans must clear a 14-day quarantine in an effort to fight the spread of COVID-19. That’s not to say it all will come from the US as some 11 MMT of beans are in transit from Brazil and will arrive in the weeks ahead. Nevertheless, the restocking of the Chinese pipeline will be an important feature in any recovery in prices heading into planting season here in the US.

Have a Safe Day!

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

Good Morning,

Markets were higher overnight with short covering and news that China appears to have stepped up and bought corn, beans and wheat in the last 48 hours. Concerns over supply from South America have been fueled by the coronavirus outbreak in South America and weather concerns. This may lead to more long term support in the markets, but short term the virus and oil wars are going to lead the way.
Demand destruction caused by COVID-19 and a falling energy market due to overproduction in Saudi Arabia and Russia are having a major impact on demand. Research done by a private analyst suggests we could look for a 12% drop in demand for gasoline in March, a 40% drop in April and a 20% drop in May. That is over 8.6 billion gallons of demand for gasoline due to limited or postponed travel. That means a demand drop in ethanol equivalent to o 331 million bushel of corn in 2020! Ethanol plants are slowing down or shutting down daily across the country as demand disappears and margins fall to unseen levels.
Corn is unchanged, soybeans are up 9 and wheat is up 2 to start the day. There will be a lot of fluctuation as stories about the virus swing the markets back and forth.

Have a Safe Day!

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

Good Morning,

Corn continues to grind lower while soybeans and wheat have stabilized. Corn is down 7 while soybeans and wheat are both up 4 to start the day.

Selloffs in commodities due to both the coronavirus pandemic and an ongoing trade war between Russia and Saudi Arabia is putting a squeeze on US ethanol producers; with gasoline futures now down to their lowest levels since they began being trading in 2005, ethanol producer margins are deeply in the red; much of this negativity is being driven by the crude oil price war between Saudi Arabia and Russia and that battle does not appear to be ending any time soon. Plants across the country are slowing down or shutting down and most are drastically widening basis levels due to the current margin levels.

There is talk that China may be looking for US soybeans, US fob soybean prices are now competitive vs Brazil. Soymeal could be supported by continued confusion over Argentina export situation. This week private estimates of Brazil and Argentina soybean crop were lowered due to dry weather.

Producers with old crop corn should be making sales and locking in current basis levels as this will continue to get worse with ethanol demand dropping sharply with severe restrictions on travel.

Have a Safe Day!

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