Good Morning,

As expected the USDA had a issue estimating the size of last year’s corn and soybean crops! For months many have argued that they were too high…and they were proven correct in the end. NASS revised down 2018 bean production by a record 116M bu. with yield down 1.0 bpa to 50.6 bpa. Planted area dropped 300k acres as well to 89.2M acres with harvested area down 400k acres to 87.6M acres.

September 2018/19 corn stocks missed the average guess by over 320M bu. at 2,114 Mil Bu due to enlarged feed/residual use. This would mean we saw record corn feed/residual use in the 4th quarter.

The bears will struggle to sustain much downside pressure until the trade has a better idea about 2019 corn and soybean yields. Following a miss of more than 2.5% by the USDA on both corn and beans, traders will question the methodology that they used to calculate the size of the 2018 crop when it is likely being applied to the calculations for 2019 crops. One possible culprit to the miss could be the cold/wet harvest weather we saw last fall.

There is no evidence of a Midwest frost/freeze into the middle of October and this should allow crops to continue to mature, but temperatures will be becoming more seasonally cool across the northern Corn Belt which slow things down some.

While yesterday’s report put a spark in the markets, the long term issue remains demand. Until we see a shift in exports or domestic demand this market has no reason to move dramatically higher or lower. The current stocks to use ratio sits at 13% with the USDA’s latest number. We would have to drop yield to 164 bpa to get stocks below 10% which is historically the level we need for corn to trade above $4 on the CBOT.

This morning corn is up 2 and soybeans are up 5.

Have a Safe Day!

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

Good Morning,

Another day and more rumors of China eliminating tariffs on additional bean purchases from the US. Yesterday’s rumor suggested that China was going to allow an additional 5 mmt of beans to ship tariff free thru January. Illinois Governors’ office Tuesday released statement saying a letter of intent was signed by the Taiwan Feed Industry Association and the Illinois Corn Marketing Board for $2.2 billion in corn, corn product and soybean purchases over the next two years. Corn purchases are expected at 5.0 mln mt, corn product purchases at 500,000 mt and soybean purchases between 2.5 to 2.9 mln mt over 2020-2021 period. The problem with both of these “rumors” is that there has been no follow thru. A lack of confirmation of Chinas bean purchases and negative comments from President Trump on the trade war at yesterday’s UN summit have the markets stagnant to lower today.
Harvest delays in the west and northern areas due to rains could add premium to the market in the coming week. Traders are focusing on the Stocks report Monday. Next Monday the USDA will release its September 1st quarterly stocks report. Estimates are for 2.43 billion bushel in corn which compares to 2.14 in 2018.
With the funds short 162k corn contracts we could see some short covering in the next couple days ahead of month end.

Have a Safe Day!

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

Good Morning,

Corn saw support from the bean market and flooding in the northwest Corn Belt yesterday and managed to close a couple cents higher. Yesterday’s bean rally was the result of China buying PNW beans and reports that Chinese officials rumored to have temporarily lifted tariffs on up to 200 mmt of soybeans. Beans failed to hold the highs as all of these beans were not bought causing traders to question China’s demand for US beans. The market needs to see more than “good will” purchases if it is going to add fundamental risk premium. If China doesn’t buy all 200 mmt, this could be viewed as bearish the bean markets.
There is no serious threat of damaging cold weather in the Midwest growing areas for the next two weeks but there is talk of frost in North Dakota and Minnesota along the Canadian border next week.
Weekly export loadings last week were the lowest since 2013 and significantly below last year. The lack of demand has been and will continue to be the market mover regardless of crop size.

Have a great day!

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

Good Morning,

The Chinese trade delegation canceled their US farm tour stops on Friday causing the markets to end last week on a down note. Reasons for the cancelation were not clear, but it is rumored that the farms were actually the ones cancelling the visits. The Chinese were scheduled to visit hog farms in Montana and Nebraska. The farmers are restricting visits due to the swine flu that has devastated the industry.
Markets are stronger this morning after some heavy rains soaked fields from Missouri, Iowa, Illinois and Wisconsin over the weekend.
Next Monday 9/30/19 the USDA will release the September 1st quarterly grain stocks report. Expectations are for this number to be well north of 2.0 billion as exports and domestic demand have been slow.

Have a Safe Day!

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

Good Morning,

Even markets to open the day with corn unchanged and beans up 2. Forecasts for the next week locally look favorable with temps in the 70’s thru next week. The first day with sub 40’s isn’t until 10/2 and that is forecasted to be 36.
The latest ethanol production report had production down 20,000 bpd to 1,003,000 bpd. This is the lowest level since April. Reports yesterday that Siouxland Ethanol (90 million gallon plant) in Sioux City IA is shutting down is just another one to the growing list of plants now offline with negative margins. President Trump is meeting with senators from refining states to discuss the RFS as the President is under pressure from cornbelt senators to help the farm community.
Export reports this morning for last week came in above estimates but still significantly behind the pace needed to meet USDA projections. This common theme will continue with a stronger US dollar and increased world supply.

Producers should take advantage of any CBOT or basis bounce for the old crop or any fall bushels that they have left to move. Harvest has hit central IL which is going to put pressure on basis regardless of the crop size as stocks increase. I would advise producers with adequate storage for their fall corn to have 50 % of your crop sold and sit tight on the remaining portion until late winter/early spring.
Have a Safe Day!

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