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

Good Morning,

China and the US are scheduled to sign phase one tomorrow which is becoming old news, but the psychological implications of this may be more than enough to move the markets higher tomorrow or Thursday for a short period of time. How they are planning to divvy up the money will be the biggest takeaway from tomorrows deal.

Many question the ability of China to be able to meet the obligation to purchase 50 billion in energy supplies and raise ag purchases to 32 billion, over the 24 billion previously spent. China would also need to buy 80 billion is manufactured goods. Energy exports to China were about 8 billion in 2017 and 2018. US Crude, liquefied natural gas and ethanol will have to play a major part to jump imports from the 25 billion a year, two year commitment, but it is doable. The private companies are worried that such a massive change in in flow would disrupt domestic markets. The farm and energy program in China is a subsidized mess, that is continually changing in policy. More changes will be coming again, probably a whole new price support or something along those lines. Right now they have an inflation problem, so that needs fixed first. China imported almost 10 mmts of beans last month, which is a huge amount.

The weather in Southern Brazil and Argentina is much different than yesterday. There is a split in the forecast that takes rain out of Southern Brazil and puts it in Southern Argentina. Rain totals increases to 1.5 inches for Argentina. Temps are in the lower 90’s which is normal for this time of year.

Have a Safe Day!

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

Good Morning,

Report Day! Prior to the 11 am USDA report, there is no news that will move the markets. Estimates are listed below. Unless there is something dramatic in today’s report I would expect traders resume trading politics and will start to focus on the size of this next years acres and potential production.

USDA 2019-20 corn and soybeans
January Report Average Estimate November 2019
Corn Production 13.513 13.661
Corn Yield 166.2 167.0
Harvested Acres 81.350 81.815

Soybean Production 3.512 3.550
Soybean Yield 46.6 46.9
Harvested Acres 75.46 75.62

US Quarterly Stocks as of Dec. 1, 2019 , in billion bu.
January Report Average Estimate December 2018
Corn 11.511 11.937
Soybeans 3.186 3.746
Wheat 1.917 2.009

US 2019-2020 Ending Stocks in billion bu.
January Report Average Estimate December
Corn 1.757 1.910
Soybeans .424 .475
Wheat .969 .974

Check back after 11 am for the updated numbers.

Have a Safe Day!

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

Good Morning,

Markets are mixed this morning with corn down 1 and soybeans up 2. There appears to be very little action in the markets as traders anxiously await Fridays report. Funds have reduced their short positions in corn and soybeans over the last couple weeks with the holidays and unknowns of where the Chinese tariff talks and potential war escalations with the Middle East may lead us. Last night’s Iranian missile strike on US bases in Iraq resulted in no casualties, but does have traders on edge wondering what if any follow up there will be from the US or Iranian leaders.
South American weather forecast has regular rain coming into the 18th f January. Argentina has moved back to a normal pattern seeing rains every few days. Southern Brazil is back to steady rainfall.
The sow herd in China expanded 2.2% from November and is up 7% from September. The hog herd was estimated to be down 41 percent from a year ago, but is slowly building back up. The curve on growth is going to steepen in coming months, with most all female pigs begin held back. Some estimate it will take years to build back up, but at the current pace it will be much quicker than that. This is what I believe will increase the demand for US soybeans long term.
This year’s crop quality is not good with light test weight and higher foreign material being seen across our draw area. This in addition to corn that dried down much harder than years past increases the possibility of grain going out of condition in storage. Producers should be actively monitoring their bins and coring more frequently than years past. I would advise moving your grain early and re-owning on paper if you believe the markets are going to improve.

Look for choppy trade to continue ahead of Fridays Report.

Have a Safe Day!

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

Good Morning,

Prices are mostly lower following a rather boring session overnight. Outside markets are relatively quiet. Corn is down 1, beans down 2 and wheat off 2. The funds will spend the next three days preparing for Friday’s final production figures and December 1 stocks reports from the USDA. The funds are currently short 91,000 corn and 6,000 bean contracts.
When we finally get a look at the numbers the average guess on corn ending stocks is expected to come in just under 2 billion bu. and just over 500 million bu. for beans. Both numbers would be modest increases from the USDA’s last estimates in December as lower exports offset any reductions in yield. Corn exports, in particular, have disappointed this year as reduced competition from South America and a rise in prices out of the Black Sea did little to spur any additional export sales.
If you have not been marketing old and new crop bushels I would strongly suggest you step to the plate. Uncertainty in the markets are the only guarantee we have at this time. Be sure to get sales on the books and offers in with your buyers before Fridays USDA report. I would advise active selling of both old and new crop corn at current levels. This years crop left a lot to be desired when it comes to quality.(light TW and Higher Foreign Material) Bins should be cored and monitored more frequently this year to prevent grain going out of condition.

Have a Safe Day!

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