Good Morning,

Markets are on the slide again this morning after China revealed its counter measures to the US tariffs expected to be implemented on September 1. Reports are that China will put 5% to 10% import tariffs on $75 billion in US goods coming into the country. The tariffs will be applied in two steps, matching the US tariffs implementation on September 1 and December 15. The total tariff list includes over 5000 goods coming from the US to China. China also said that is will resume additional tariffs on US auto and auto part imports, while indicating that crude oil is among the products that will face a 10% tariff.
Reports that President Trump will meet with the EPA and USDA office to talk about different options regarding ethanol and the exemptions to 31 oil companies that was proposed. The blow back in the industry has made the Trump administration look further into the impact this policy would make and possibly take a different course.
Pro farmer will release their US corn yield sometime later today. The tour found Iowa corn at 182.8 down from last years 188 bpa, and NASS estimate of 191 bpa. Minnesota corn was estimated at 170 bpa vs. NASS 173 bpa.
We may not agree with the USDA’s projections of the size of this years crops (acres and yield), due to prevent plant and late planted acres that will not meet historical yield potential but those numbers may be irrelevant. If no one can afford to purchase a product the lack of demand will keep prices from rallying. The law of supply and demand is at work and needs to be kept in mind by producers that are expecting a big move in the markets in the coming months. The lack of demand is and will keep prices from rallying unless there are some dramatic changes. The markets always end up at the level where supply and demand meet and as of right now that price appears to be lower.

Have a safe day!

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

Good Morning,

Corn is struggling to find its direction on the CBOT as traders continue to watch the Pro Farmer tour reports and news regarding the Biofuels industry. Lower projected yields continue to come from the tour which is not in line with the USDA’s numbers from last week. This is supportive to the markets, but is being met with reports of more and more ethanol plants slowing down or shutting down due to terrible margins. President Trump is set to meet with the USDA’s Perdue and the EPA’s Wheeler today to discuss potential options to support Biofuel producers.
The ProFarmer Tour pegged corn in Illinois at 171.1 bpa, down 10 bpa from the USDA’s August estimate. On the Iowa leg, corn yields in western part of the state were better than expected, but surveyors will still need to work their way through the eastern portion today before can get an accurate feel of just how ProFarmer’s estimates stack up against the USDA forecast for Iowa of 191 bpa.

It will be interesting to see just how ProFarmer ends up calculating their estimates when they release them during their final meeting Friday. The lack of muturity has been a big problem throughout the Tour, but in particular across the northern third of Illinois. Normally participants take more than 200 samples in order to help build their forecast; however, so much corn was planted in June and beans in July that they were only able to get just a fraction of the sample size they were expecting due to the lack of maturity.

Late yesterday a story broke about the USDA pulling all of its staff from the annual crop tour after an employee was threatened by an angry farmer. Frustrations have only grown over the past few weeks after this month’s WASDE crop report appeared to ignore the damage from this spring’s historic flooding. When you factor in all the additional stress placed on producers due to the trade war with China, falling farm income and tighter credit conditions, it is not tremendously surprising that farmers have begun to vent.

Have a Safe Day!

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

Good Morning,

Weakness in the markets yesterday as rains passed through Iowa, Illinois and Indiana with total rainfall much better than the models had predicted. The markets have opened lower this morning with corn down 1 and wheat down 3.
Prices are usually at their lowest of the season in corn and wheat going into the end of August. All the storage and dp contracts for corn and beans go off at the end of the month. The 31st of August, many times has marked the low price period for the year. The threat of an early frost or subpar yields appear to be the biggest thing producers are holding on to help move prices higher. Unfortunately basing your marketing on these two items may not be beneficial. End users have enough on the books for the first quarter, and there is no rush to further book grain. Prices also have a habit of holding back until crop insurance prices are set in October.
The Pro Farmer corn yields for Indian were 161.5 BPA, compared to 166 by NASS. Indiana soybean pod counts were 924 vs 1,312 last year. Nebraska corn yield was 172.5 vs NASS of 186. Nebraska pod counts were 1,210 vs 1,299 last year. We’ve thought that beans will be down in yield between 20 and 40 percent on most farms with short beans, late development and low pod counts.
Yesterday morning POET, the nations largest ethanol producer, announced that they will be making some operational changes due to market conditions.
1. POET Bio-refining – Cloverdale will idle production indefinitely.
2. Half of POET bio-refineries will run at reduced production rates
We have had reports of many other plants slowing or closing down due to poor
I would advise producers that are sitting on old bushels that need to move before harvest to lock in basis very soon. Once the calendar turns to September the gates will open regardless of cash prices as most producers and elevators will empty out their remaining stock to make room for this years crop. Producers needing to make new crop sales should consider making fall basis sales vs. the CH to give them a little more time to market once the crop is in the bin.

Have a Safe Day!

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

Good Morning,

A drop in crop condition ratings and early results from the ProFarmer Crop Tour had the markets higher overnight, but have since lost that strength. The corn market is currently down 4 with soybeans unchanged.
The tour reported 154 bpa for both S. Dakota and Ohio on their first leg. This was off 6 bpa for Ohio and 3 for SD from last week’s August forecast from NASS. Soybean pod counts disappointed as well with S. Dakota coming in at 833 versus 1024 last year and a 3-yr average of 965. Ohio’s pod count was off even more with just 764 pods versus 1248 last year. For some perspective, Ohio’s 3-yr average sits at 1137.
August is nearly over and maturity seems to be a major concern for the surveyors on both legs of the tour that may leave some farmers hoping for higher temperatures to try to help push these crop over the finish line. Today the tour will be checking fields in Iowa, Minnesota and Indiana as they work their way to middle and hold their meeting on Thursday to release their final yield estimates.
Unfortunately for producers with unsold old crop and unpriced new crop the biggest issue is demand! Regardless the size of this years crop, exports have been poor and domestic demand is diminishing daily with poor margins. Every week we hear of more ethanol plants that are slowing down or shutting down until things turn around. Unfortunately the turn around doesn’t look like it will be anytime soon!
I would advise producers that are sitting on old bushels that need to move before harvest to lock in basis very soon. Once the calendar turns to September the gates will open regardless of cash prices as most producers and elevators will empty out their remaining stock to make room for this years crop. Producers needing to make new crop sales should consider making fall basis sales vs. the CH to give them a little more time to market once the crop is in the bin.

Have a Safe Day!

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

Good Morning,

I am back in the saddle again after a short break from the morning commentary! For those that are regular readers of the Didion Morning Market commentary you may have noticed the commentary has been written by Drake Bliss the past two months. Drake joined us this summer as an intern from Kansas State. Friday was his last day as he headed back to Kansas to prepare for his Senior Year at Kansas State. I would like to thank Drake for his contribution to our team this summer and wish him the best in his final year of school.

Softer markets to open the week with corn down 5 and soybeans down 6. Timely weekend rails over dry areas are adding pressure to prices this morning. The funds sold off more than 60,000 contracts in corn last week leaving them long about 13,000 contracts. The Dow is off to a good start following comments from Commerce Secretary Ross that the US will extend a 90 day exemption for US customers from a ban on doing business with China’s Huawei Technologies. President Trump indicated over the weekend that negotiations were doing very well with China and that they are talking.

The Pro Farmer tour is off and running this week and traders will be keeping an eye on the feedback from this group as they work their way thru OH, IN, IL, IA, NE, SD and MN. Early reports from the first morning are showing what every area in the Midwest has “variability”.

The pendulum has definitely swung and I look for them to take a short position home by the end of this week if weather and the crop tour continue to be bearish.

Have a Safe Day!

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