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Daily Insights

January 10, 2022

Good morning,

Weaker markets to open the week with corn down 5 and soybeans down 15.

Markets initially reacted to a change in the weather maps to wetter, with lower trade last night flowing into this morning. We’ll have to see if the banks want to come out of some of these long positions.  You can portion out another sale on this market peak.  We also have the USDA Report coming on January 12th.  The market will expect to see reductions of Brazilian and Argentina production, but the adjustments will be slower to come as that is the way it’s done at the USDA. I am not overly bearish but think the weather forecast is going to stop the rally for now.
Argentina will face intense and prolonged heat coupled with little or no rain through Jan. 12, fueling concerns over corn and soybean crops, according to a report from Buenos Aires Grain Exchange. The forecast for South American is going to be very hot this week with temperatures reaching as high as 112 degrees.  A storm system is building in the 10-day outlook that had been showing up on the extended forecast last week.  There is more rain on the extended forecast as well in the long-range map this morning.  The temperature map also backs off in the heat department as dome is going to be much smaller moving forward. Northern Brazil will also see lighter rains over the next week.  This forecast has been moving to drier for Northern Brazil and wetter for Southern Brazil and Argentina since last Tuesday.
Trade is all about weather today and I would expect a lower closed today as the markets appear to have reached a top for now. With the USDA report out on Wednesday I would look for a little more profit taking leading up to that report.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didioninc.com

January 7, 2022

Good morning,

 

Corn is down 3, soybeans are unchanged and wheat is down 7 to start the day.

Traders are coming to grips with the change to wetter weather in Southern Brazil and Argentina.  Much of the crop has been lost, but this forecast change could stabilize yield.  However, we won’t know much for another 7-10 days if this will actually even happen.

The forecast for South America is the same this morning.  Hot, dry conditions prevail over the next 7-10 days.  A reprieve of the dryness is forecast starting around January 14th to 15th.  Rain is expected to fall of .5 to 2 inches in the driest areas of Southern Brazil and Argentina.  It took a couple days for most traders to come on board with this change, as it could just as easily have been an anomaly in the models.  The dome is still prevalent in the back end of the models, just not quite as intense.

Next Wednesday the USDA will release their final report for the 2021 crop. Historically this is a big report and despite the estimates not showing much change, I would expect this one will have something to fire up the traders. (up or down) If you have old or new crop corn to move, I would suggest taking off some of the risk ahead of this report to prevent getting caught by any bearish numbers that could be released.

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didioninc.com

January 6, 2022

Good morning,

Corn is down 3, soybeans are down 13 and wheat is down 15 to start the day. The combination of the Fed raising rates and a change to slightly wetter weather in Argentina has the market lower today.

The Federal reserve signaled that there is a possibility of faster than expected rate hikes and stimulus withdrawal.  Minutes from the Fed’s December meeting had shown that a tight jobs market and unrelenting inflation could require the U.S. central bank to raise rates sooner than expected and begin reducing its overall asset holdings.  This has put some pressure on commodities overnight.

Total DOE weekly fuel ethanol production declined slightly this week to 1.048 million barrels per day, down from 1.059 mln bpd last week but still above 935k bpd on the comparable week last season.

USDA Export sales were:  48,600 mt of wheat, 256,100 mt of corn, 382,700 mt of beans, 22,800 mt of sorghum, 3,900 mt of beef and 19,400 mt of pork.  Slowest sales of the season.

The forecast for weather in South America for the next 7-10 days is very hot and dry in Southern Brazil and Argentina.  There is however a significant change to wetter weather from Jan 14-22nd. This rain must happen, but for now the forecast will drive the market.  It is going to be really hot over the next week in Argentina with temps in the 100’s.  This is the most stressful weather they have seen in years.

Have a safe day!

 

Garry Gard

920-348-6844

ggard@didioninc.com

December 31, 2021

Good morning,

 

Corn and beans are starting the day higher after a week of lower trade. Corn is currently up 2 and soybeans are up 8.

 

We are down 20 cents in corn from the highs posted on Monday with concern over Omicron, better South American weather and funds moving money to other markets.

The forecast in South American calls for light rains early next week in Southern Brazil and heavy rain in Northern Brazil.  Argentina has a small chance of an inch of rain in the South.  Temps are going to heat up again over most of Argentina.

I believe the biggest mover the last couple days has been the funds moving money.

2021 had a lot of ups and downs in the markets, but a lot more up in all commodities. Corn is trading 30% higher and soybeans are 20% higher than a year ago this time. A strong export program along with smaller South American and Canadian crops were the drivers. Unfortunately, the market increases have been eclipsed by input costs for the 2022 crop year.  Producers that are holding out on sales because they think input costs are reason for the markets to trade higher should be careful. The markets are not concerned with how much it costs to grow a bushel of corn or soybeans. Supply and demand are the drivers of every market. If/when South American weather changes the world supply will change. I do not see us trading below $4 for corn and $11 for soybeans on the CBOT anytime soon, but good prices need to be captured when they are present.

Thank you to all of our producers we partnered with  in 2021. We look forward to working together in 2022 to make your operation be even more successful.

Here’s to hoping 2022 prices may be more stable than 2021 and that your year may be filled with great opportunities!

 

Have a Happy New Year

 

 

Garry Gard

920-348-6844

ggard@didioninc.com

 

December 27, 2021

Good morning,

Markets are higher as we start the week with corn up 4 and soybeans up 18.

The forecast for South American weather is still hot and dry this morning.  The next 10 days will see limited rainfall in Southern Brazil and Argentina.  The long-range forecast has a breakdown of the high-pressure ridge, temps will cool down some but not totally go away.  This looks like a significant change for temps in Argentina, but there isn’t very much rain developing.

The current forecast is bullish for South America, but the long-range has a chance for a significant change.  This isn’t a forecast the market would normally rally on.  The longer the Funds get in beans, the more the volatility can increase.  The funds are very long corn positions, which make that market very crowed if they must move to the exit door.

South American weather will be the driver as we close out the year and head into the January crop report. Weather can be a very tricky market mover as we have all seen in the past. Forecasts move the market long before the actual weather which increases volatility. I would suggest being proactive in any old and new crop corn and soybeans sales you have to make; this weather will be changing.

 

Have a Safe Day!

 

Garry Gard

920-348-6844

ggard@didioninc.com

 

 

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