Good Morning,

The markets got a boost this week from some active short-covering by the funds after the surprisingly bullish report from the USDA to kick off the week. While things cooled off as the week wore on, fund managers are still maintaining a good-sized net-short position and are currently short 137,000 corn contracts.
The latest weather forecasts are a little warmer, but not warm enough to keep things above freezing in the Dakota’s and portions of the western Corn Belt over the next week. Eventually the more seasonally cool temperatures will move over the rest of the Midwest, but big threats to national yield estimates from frost/freeze will be limited.
Next week could be an interesting one. The early yield reports we are hearing on corn are all over the board from last year. Beans sound as they may end up being lower than last year. Weather outlooks continue to show the mercury dropping and fields too wet to make any progress getting anything in the bin. Additionally, we will get to see the latest estimates on production from our friends over at the USDA. And if that weren’t enough the Chinese negotiating team will be sitting down in high-level meetings with their US counterparts in Washington DC. Let’s hope something can get done there because we are in need of some bullish news for traders to react to. Any bullish news should be countered with sales by producers as it won’t last long!

Have a Safe Weekend!

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

Good Morning,

Better US weather forecasts, fund consolidation and increasing yield reports have led to softer markets the last two days. With a lack of fresh news in the market traders appear poised to wait on next which could have a lot of market movers. Next Thursday’s Crop production and S&D report will give us an updated look at planted and harvested acres, yield and demand updates. Private analyst FC Stone released their estimates yesterday and put corn yield at 169.3 bpa which is above the USDA’s September estimate of 168.2. This should be a reminder to producers that things are not bad everywhere especially in the west.
Next week will also bring the Chinese trade team to Washington DC to continue talks on trade and tariffs. This may sound like a broken record, but there has been a lot of positive news in the past month with tariff delays that has most feeling that things are finally moving in the right direction.
Export sales this morning were on the low end with 19.4 million bushel compared to trade estimates of 15.7-31.5. Soybean sales were also soft at 38.1 million bushel compared to trade estimates of 33.1-51.4.
I would encourage producers to not only be looking at your 2019/20 crop marketing plan, but start to take action on the 2020/21 crop. With the strong potential for 94-95 million acres of corn to be planted this market has a much greater downside than upside. I would recommend locking in some cash sales at $3.85-3.90 range to take some risk off the table.

Have a Safe Day!

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

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