Good Morning,

Corn and soybeans are both slightly lower this morning with no excitement in the markets ahead of tomorrow’s USDA report. Traders appear willing to sit on their hands with most of their positions until they get confirmation of the USDA’s state by state surveys tomorrow. Producers need to keep in mind that tomorrows numbers are the first official survey of the summer row crops and often produces some serious volatility and surprising yields. The trade is anticipating record large yields, so anything below 176 bpa for corn and 50 bpa for soybeans could open the door to higher prices. Anything above these levels could mean that the highs are in and the market will trend back to the lows made in July.
Ethanol production in the week ending August 3rd was the second highest on record at 1.1 million barrels/day. Stocks were up from 923 million to 963 million gallons. This increase in stocks has resulted in margins in ethanol dropping dramatically this week.
Weekly export sales reported this morning showed old crop corn right on pace with the ten week average at 21.8 million bu. New crop export sales came in at 26 million bu. which is the lowest in the last 4 weeks, but ahead of the ten week average of 20.0 million. Corn exports are ahead of last year and the USDA’s projections for 2018 with only 4 weeks left in the marketing year. Soybeans are well below last year, but right on pace with the USDA’s projections for 2018.
My advice would be for all producers to look at making some cash sales ahead of Fridays report and look to lock in basis sales for new crop corn. (October forward) If we see the CBOT rally, we are guaranteed to see basis depreciate like it has the last two years with adequate carryout.

Have a Safe Day!

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

Good Morning,

Markets were steady overnight with corn up 1 and soybeans up 3 despite news of more sanctions against China. The US announced it will begin collecting 25% tariffs on an additional $16 billion in Chinese imports on Aug 23.
Traders appear content to remain neutral heading into Friday’s report where they will get a state by state estimate of this year’s crop. The average trade guess for yield is 176 bpa with a range of 171-180. Ending stocks are expected to rise from 1.552 billion to 1.636 billion bushels. The average trade guess for soybeans is 49.6 bpa with a range of 48-51.5. Ending stocks guesses average 638 million bushels up 58 from July.
New crop demand is where I am looking for the markets to get help. With lower corn production in South America and the Black Sea region, the US is going to have to cover the world’s production shortages. I believe soybeans will get their support from increased demand as importers come to the US for the cheapest beans on the market despite tariffs. The challenge in both commodities will be the timing of any market rally. Producers that are in need of cash flow or space constraints may not be able to capture any rally we may see. My advice would be for all producers to look at making some cash sales ahead of Fridays report and look to lock in basis sales for new crop corn. (October forward) If we see the CBOT rally, we are guaranteed to see basis depreciate like it has the last two years with adequate carryout.

Have a Safe Day!

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

Good Morning,

Issues with the world’s wheat crop in Russia, Canada and the EU has that commodity trading higher overnight. The wheat strength is not moving corn higher, but is giving it some support as corn trades unchanged this morning. Soybeans have bounced from yesterday’s losses and are trading 14 higher this am in response to yesterday’s crop conditions rating.
Yesterday’s crop conditions report showed corn drop 1% to 71% G/E compared to the five year average of 68%. Wisconsin came in unchanged at 81% G/E compared to the fiver year average of 74%. US soybeans dropped 3% to 67% G/E which is just above the 5 year average of 66%. Missouri continues to lead the trend lower with their corn crop rated 26% G/E and their soybeans at 34% G/E.
For those that say “we don’t matter” when it comes to production, but think the markets should be trading higher because of issues in Missouri here is something to consider: Missouri has ranked in the top ten for corn production just behind Wisconsin in 3 of the last 4 years.
Look for corn to trend sideways into Friday’s report when traders will find out how “BIG” the USDA is expecting this crop to be. Soybeans should remain steady to stronger headed into Friday provided we can avoid any news on the tariff front.

Have a Safe Day!

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

Good Morning,

On Friday private analyst Informa released its crop estimate for the US which came in at 176 bpa and a 14.392 billion bu. production for corn. This is 2 bu. less than FC Stone released on Wednesday, but 2 bu higher than the USDA has been using.

There was no new news in regards to the US and China negotiations over the weekend. Canada’s Foreign Minister did say he is keen on concluding NAFTA negotiations and is ready to talk at any time. The US and Mexico are expected to meet again this week to work on a resolution as well.
Tariffs are not the only issue that could be affecting soybean trade in the near future. China is likely to cut imports of soybeans by more than 10 million tons this year thanks to new soymeal technology and the use of supplements such as sunflower seeds and palm seeds. The use of low protein formula in animal feed could cut China’s annual demand for soymeal by 7% or 5 million tons of soybeans.

The market has been in a short term uptrend over the last couple weeks and we could see additional buying as traders position themselves ahead of Fridays report. The USDA will release its Supply and Demand and Crop Production report on Friday at 11am. This report will show their results of a state by state survey for yield and production on corn and soybeans.

Have a Safe Day!

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

Good Morning,

The US Midwest weather forecast had no major changes as close to average rains and no prolonged heat looks to continue. A front looks to bring rainfall to most areas of the Midwest thru the first half of next week. The 11-16 day forecast has mostly average to above average temps with average precip for the Midwest.
Informa will release its production/yield estimates this afternoon. Expectations are for their numbers to mirror FC Stones estimates which were released on Wednesday. Right now it appears the markets are trading a 176-178 bpa yield in corn and a 49-51 bpa in soybeans. Look for traders to start gearing up for next Fridays report early next week. The funds are currently short 133k corn and 65k soybean contracts.
Demand for corn has continued to be strong and if prices remain low, the export demand could bring carryout below 2 billion bushels even with a yield of 178. (view chart below).

18/19 USDA June est Projection #1 Projection #2 Projection #2
Planted Acres 89.1 89.1 89.1 89.1
Harvested Acres 81.8 81.8 81.8 81.8
Yield 174 178 183 185
Carry in 2027 2163 2163 2163
Production 14230 14569 14969 15133
Available 16307 16782 17182 17347
Feed Use 5425 5375 5375 5375
Industrial Use 7105 7105 7105 7105
Ethanol Use 5625 5625 5625 5625
Exports 2225 2400 2400 2400
Total Use 14755 14880 14880 14880
Carryout 1552 1902 2302 2467

In my opinion only a yield of 174 or less will move this market higher. The export estimates above in projection 1,2 and 3 are assuming that trade negotiations between the US and our partners gets worked out. China is preparing to retaliate in the escalating trade war on tariffs on about $60 billion worth of US goods. The import tax could range in rates of 5 to 25 percent. The implementation date of the taxation will be subject to the actions of the US. This statement came in response to yesterday’s news that President Trump would like to increase tariffs up to 25 percent.

Have a Safe Day!

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