Good Morning,

Markets are off sharply this morning with corn down 8, soybeans down 10 and wheat down 7. Fears of the rapidly spreading coronavirus have traders with a “risk off” mentality to start the week. All three components of the CBOT are seeing liquidation in active trading. The reason we are seeing this hurt our markets so much is that there is just so much unknown about the virus. The rapid spread of the disease is definitely alarming with the latest speculation surrounding the possibility of an incubation period of over 2 weeks before the symptoms emerge.
Deaths in China climbed to 80, the National Health Commission said on Monday. That’s up from only two just over a week ago. There are 2,744 confirmed cases on China’s mainland, and more than 30,000 people are under observation. 56M people have been quarantined in an effort to slow the spread of the disease; however, Chinese authorities said the virus isn’t yet under control despite aggressive steps to limit movement for millions of people who live in cities near the center of the outbreak. Mainland China accounts for 98% of confirmed global infections, while more than a dozen countries and territories reported the illness within their borders. The WHO said that of 29 patients with infections outside China, 26 traveled through Wuhan.
So far we have 5 cases reported here in the US and daily life has yet to be affected. 3 of them have been confirmed within the last 24 hours: two in Southern California and one in Maricopa County, Arizona. All the patients had recently been in Wuhan and are hospitalized. Their close contacts are being monitored for signs that they may be developing the disease, the Centers for Disease Control and Prevention said Sunday.
South American weather models continue to look favorable with improved chances for more normal precipitation across Argentina. In Brazil, nearly all the crops should enjoy near normal rainfall as well with totals ranging from 1.5″ to 4″. This favors a soy crop that is still in the middle of reproduction. High temps range from the 80’s to mid-90’s. Additionally, early harvest reports out of Mato Grasso have bean yields running up 5% to 10% higher than last year.
The selling this morning seems to be a bit of an overreaction to all the news from the weekend. Granted the whole situation does possess the possibility to become another “Black Swan”, but as far as the Ag community should be concerned it is probably way too early to be drawing any conclusions.

Have a Safe Day!

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

Good Morning,

Softer to end the week is going to be the story today. Corn is currently down 4, beans down 5 and wheat down 8! Traders continue to be concerned about the impact of the virus in China and how this could impact trade. Weather in South America remains good for crops and bad for prices. Brazil has been getting about 4 inches of rain every week for the last two months which is making their crop bigger and bigger. Argentina weather has been normal for their growing season where they have had very few dry spells.
January is usually a bad month to make sales as we rarely see the market move higher to start the New Year. The graph below shows the CBOT action over the last 5 years by month. Historically we trade sideways October thru April with rally’s happening May thru July. The problem this year is that economics are still so bad for beans that no one is going to want to plant them again this year(outside of normal rotation). We will have high planting intentions for corn in March and whatever the price guarantee for corn in February is, we will lose that price on the March crop report. If you need to sell a commodity for cash, my advice would be to sell corn and keep beans. You should be selling old crop corn and new crop corn with futures at or near the $4.00 level. There are some really good basis levels for old crop corn. New crop basis levels are also at very good levels compared to where I believe they will be when harvest 2020 arrives.

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Have a Safe Day!

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

Good Morning,

The combination of excellent weather in South America and fears over the coronavirus have pushed beans lower again this morning. As we get closer to February expectation for high yields in Brazil will continue to weigh on beans. Soybeans are down 8 with corn up 2 and wheat up 2 cents as well. Weekly export sales are delayed until tomorrow due to the holiday on Monday. China begins their Lunar New Year Holiday this Saturday.
Uncertainty about soybean purchases from China and an Indian ban on Malaysian palm oil also have the bears in control early today. Despite the signing of the Phase 1 trade deal providing some stability, the Chinese have still not booked any US beans since as they continue to bide their time on any potential buying. With a big crop coming off in South America, traders will begin to focus on spring weather in the US.
Funds are currently short 92,000 corn contracts and 20,000 bean contracts. Both have been fairly steady over the last month.

Marketing Advice:
• If you are looking to get $4 for February or March delivered corn? Give us a call to see how we can get there!
• New crop 2020 cash prices are in the $3.80 range, these should be your starting levels with up to 30% being sold.
• Put in firm offers for additional new crop sales at $3.90-4.00 levels. (Huge acres in 2020 are going to push ending stocks into the 2 billion level)
• Bean basis is strong and sales of old crop beans for February thru May are recommended.

Have a Safe Day!

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

Good Morning,

Markets are taking a risk off approach this morning as fears grow on the spread of a new Chinese virus that is affecting global travel and trade.
Traders also seem unimpressed by China’s comments that they will secure the agreed upon Ag purchases in a competitive marketplace. This raised concerns that Beijing will not follow through as promised. Basically the trade is telling them to “put their money where their mouth is”. US corn is the cheapest in the world going out 6 to 8 weeks as Argentine prices soar due to an old crop shortage. Additionally, corn out of the Black sea has been steadily on the rise. This puts some credence into rumors of between 2 to 5 cargoes of corn being sold to China out of the PNW that had corn prices surging on Friday.

South American weather models continue to show excessive rains for fields in northeast and northern Brazil (3″ to 7″) that will slow soy harvesting and likely cause delays in the safrihna corn getting planted there. The same runs show less rain for Argentina as a drier pattern evolves across the region and spreading into southern Brazil. The dry period is not a massive concern following the recent round of showers, but will need to be monitored should it continue into February. Crop condition ratings are currently very high and could prove difficult to maintain as the season wears on should any weather hiccups emerge.

Corn is down 5 and soybeans are down 10 to start the day.

Have a Safe Day!

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

Good Morning,

Looks like a case of “Buy the Rumor, Sell the Fact” in grains the last two days. Following yesterday’s formal signing of the Phase 1 deal, the market will remain skeptical until we see actual purchases from China. And those purchases will have to be in large volumes to move this market. Yesterday’s signing came with comments from the Chinese that they will be active buyers “when market conditions are appropriate”. This raises the question of how hard of a commitment is this deal and how long will it actually play out? I would expect buying will be slow in the front end unless we see some delays in South Americas harvest due to weather. Brazil corn and soybeans are still trading at a discount to US commodities into China without tariffs.
South American weather continues to be favorable overall following recent rains. Models remain in agreement for the balance of the month with a drier pattern developing over the next 10 days across Argentina and Southern Brazil. Models show rain moving north into Mato Grasso and will provide moisture to the majority of the Brazilian bean crop and safrihna corn acres for seeding. We will have to continue to monitor the conditions in Argentina, but for now there are no major threats to their pending record production.
The majority of producers and traders (myself included) were expecting the markets to at least trade higher after yesterday’s signing. The markets actions the last two days are reminders that you should take advantage of opportunities that are presented rather than waiting on something that may or may not materialize.

Have a Safe Day!

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