Good morning,

Markets are higher this morning with nearby corn up 7and summer thru fall up 3. Soybeans are up 14.

The February USDA report is usually relatively tame; however, I don’t know if that will be the case this year. Current high prices, the continued South American drought, and issues between Russia and Ukraine are all factors that can wreak havoc on these markets depending on what the USDA does.  Of particular note is what the USDA does with the South American data.  There is no doubt their crop has been severely impacted by a drought that has lasted months; the only question is how aggressively the USDA reduces the crop size in its report today.
The USDA WASDE will be released at 11am with the following expectations heading into the report:

2021/22 US Ending Stocks (million bu)

2021/22 World Production (million tonnes)

2021/22 World Ending Stocks (million tonnes)

 Updated models continue to show Northern Brazil getting above normal rainfall in the coming 8-10 days, causing delays in harvest.  As for Southern Brazil and Argentina, the story stays the same:   above normal temps and below normal rainfall.  Extreme heat with temps in the mid 90’s spiking into the lower 100’s arrive this weekend and stick around next week.  Damage is being done to the crop; the only question is how bad.  Brazilian cash prices for corn and beans are nearing record highs.

We expect quiet, choppy trade for much of today as participants set themselves up for the USDA report.  The bulls better hope the USDA delivers with material cuts to expected stocks today.  The Fund position size is very long and price risk is real if the USDA disappoints.  We are not sure what happens this afternoon.  As noted before, this report is typically a snoozer but this year is likely to be different.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didioninc.com

Good morning,

The markets gapped higher overnight due to dry weather in Southern Brazil and Argentina and the buildup of Russian troops on the Ukraine border.   Corn is currently up 8 while soybeans and wheat are up 25 and 5 respectively.

A report from Reuters this morning said that U.S. officials called on Monday for “concrete action” from China to make good on its commitment to purchase $200 billion in additional U.S. goods and services in 2020 and 2021 under the “Phase 1” trade deal signed by former President Donald Trump.

The official’s said Washington was losing patience with Beijing, which had “not shown real signs” in recent months that it would close the gap in the two-year purchase commitments that expired at the end of 2021.

The comments come a day before the U.S. government is due to release full-year trade data that analysts expect to show a significant shortfall in China’s pledge to increase purchases of U.S. farm and manufactured goods, energy and services.  Through November, China has only met about 60% of the goal.

There is a WASDE report out on Wednesday with expectations for US carryout to be 1.512 billion bushels of corn, 629 million bushels of wheat and 310 million bushels of soybeans. The South American crop is expected to be reduced a couple mmts for corn and beans in Brazil and Argentina.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didioninc.com

Good morning,

Markets are steady this morning with corn up 2 and soybeans down 2 to start the day.

We saw more selling yesterday in the markets yesterday with news out of China. There was some talk about a cancellation of 13 million bushels of corn from China; it was a logistics issue, not a demand one.

I don’t think that the market will fall that far; we may enter a consolidation period during the month of February.  The insurance price is going to be record high for farmers, but so are inputs and the price to put this crop into production.  We have a crop report next week that may not be very helpful.  We could see prices come off a little more next week.

Light rains fell overnight in parts of Southern Brazil and Argentina. Other than the major rain that moved through Southern Argentina a few weeks ago, most amounts and coverage have been spotty.  The forecast for the next 10 days has very little rain coming.  Temps have started to heat up in some areas with high 90’s to 100’s.  La Nina is still very prevalent in Southern Brazil and Argentina; crop losses are probably over a billion bushels of beans now.  Second crop corn will be the next issue.

Have a safe day!

Garry Gard

920-348-6844

ggard@didioninc.com

Good morning,

Markets have bounced after yesterday’s selloff as corn is up 7, soybeans are up 23 and wheat is up 8 to start the month.

The selloff in wheat yesterday was directly related to the beginning of some kind of negotiation to avoid war between Russia and the Ukraine.  The EU really does not want this war to escalate as to them it’s lose/lose situation. This selloff pulled corn and soybeans lower in addition to month end positioning as traders took profits.

Russia has amassed more than 100,000 troops near Ukraine’s borders, while denying plans to invade – an action that the United States and its allies have warned would trigger tough sanctions. President Volodymyr Zelenskiy signed a decree on Tuesday to boost Ukraine’s armed forces by 100,000 troops over three years and raise soldiers’ pay, as European leaders lined up to back him in a standoff with Russia. Ukraine’s armed forces currently number about 250,000, compared to Russia’s overall strength of around 900,000. Ukraine said it was working with Poland and Britain to strengthen cooperation “in the context of ongoing Russian aggression”. British Prime Minister Boris Johnson was due to meet Zelenskiy later on Tuesday as part of a Western show of support intended to convince Russian President Vladimir Putin he would pay a high price for any aggression. (Reuters)

The Forecast in South American is for above normal rainfall in Northern Brazil and below in Southern Brazil and Argentina. Excessive rain is forecast for Northern Brazil where they will see above 6 inches in the next week.  Light showers are forecast across Southern Brazil and Argentina for .25-1 inch.  The pattern holds mostly dry for them in the long-range forecast as well.  Many believe we have lost over 30 mmt of production in South American beans already.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didioninc.com

Good morning,

Stronger markets overnight did not flow thru to this morning as overnight corn traded 2-6 higher while soybeans were 17 higher across the old crop board. This morning corn is down 7 and soybeans are only up 7.

The markets continue to take their lead from the energy sector with crude oil trading near $90/bbl with calls of $100/bbl in the forecast. This is allowing palm oil and soybean oil to trade to contract highs over the last month. Indonesia which is the world’s top exporter of palm oil has all but eliminated exports to protect their local markets supply of oil. Cooking oil prices have increased 40% in the past year. The increased palm oil prices have resulted in higher soybean oil prices the last couple weeks as export demand increases for these oils to replace the higher priced palm oil. With higher oil prices, soybean demand and crush have increased as plants look to capitalize on these markets.

The Forecast in South American is for above normal rainfall in Northern Brazil and below in Southern Brazil and Argentina.  Over the weekend it was dry in Southern Brazil, and it rained between .5 to 2.5 inches up into Mato Grosso.  There are chances of rain for Southern Brazil and Argentina next week and amounts will be between trace to an inch.  It has not been quite so hot, but there is a small dome that is hanging around this week causing the dryness. The Argentine Rosario Grain Exchange says that most of the summer drought may be over but 50% of the crop is still experiencing stress.  Southern Brazil was the one that really got smoked with the heat in the mid 100’s.  This has a feeling of too late for any rainfall that may or may not be coming.   Brazilian producers have harvested 11% of the 2021/22 soybean crop as of Friday.

I feel that we are getting close to a top in beans and corn.  Loss of production in South America has been driving prices for the better part of 6 weeks.  At some point the market will have had enough and we will see a reversal.  I don’t know that it happens today, but it is inevitable as that’s how markets work.

The insurance period starts tomorrow for the spring revenue price.  This will be one of the highest crop guarantee prices we have seen as well as the most expensive crop to put in.   December corn is currently 5.75 and November beans are 13.65.  I’m pretty sure that’s the highest price we have had coming into insurance.

I would recommend producers take advantage of some of the new crop prices that can be locked in. $5.50 Fall 2022 and $5.10 Fall 2023 are some very good levels to get some risk off.

Have a Safe Day!

Garry Gard

920-348-6844

ggard@didioninc.com