June 24, 2021
Good Morning,
Markets are sharply lower to open the day with corn down 15 and soybeans down 25.
With the markets acutely focused on Midwest weather, overnight prices have declined as forecasts continue to show a wet, rainy period ahead for much of the grain growing region. Significant rainfall is forecast for the Midwest over the next 5-7 days. Some forecasting models (GFS/EU) are now calling for flooding rains with amounts expected between 4-8″ in parts of IA, IL and IN. These areas need rain, without a doubt, but would likely prefer for it not to come all at once. Regardless, the market is viewing the rainy weekend forecast as favorable for the new crop yield prospects.
In other news, a survey by Farmers Business Network is expecting the USDA report due next week to show a total of 86.5m acres of soybeans planted, down from the 87.5m forecast in the March 30th report. FBN expects that farmers opted to swap beans for corn to take advantage of the surge in corn prices earlier this year. This same survey also expects next week’s report to show an increase in corn acres from 91.1m to 92.9m acres. If FBN is correct and the soybeans acres do disappear from next week’s report, then we would expect the market to react favorably to this bullish news. As for the corn acreage, FBN’s estimate of a 1.8m acre increase falls well below the 3-4m acres that much of the industry is expecting the report to reflect.
Weekly exports came in below the 10 week average for corn with 8.5 million bushels sold compared to 11.2 for the 10 week average. Soybeans came in slightly above with 5.2 million compared to 3.5 million.
Producers should be actively making sales for new crop for any fall bushels that they need to move. I expect next weeks acres to be 3-4 million acres higher and the current weather trend is going to add yield. $4.90-5.00 fall corn is well off the highs, but significantly above anything we have seen in the past several years.
Have a Safe Day!
Garry Gard
920-348-6844
June 23, 2021
Good Morning,
Corn is currently down 2 and soybeans are up 3 to start the day. We have seen the old crop to new crop inversion get bigger over the last several days and it looks to continue as we approach first notice day.
On Tuesday afternoon, there were rumors circulating that China purchased 8-10 cargoes of U.S. new crop soybeans. This helped to offset the early overnight selling that was based solely on a forecast that shows several rain events in IA and into Northern IL. Despite the Chinese news, the market’s attention is expected to quickly shift back to US weather where the forecast shows improving chances of significant rainfall in the Eastern portion of the Midwest, including IA. It is not yet clear if the forecast rain is enough to alleviate current drought conditions. According to USDA data, 41% of US Midwest soils are in drought. The NW and Northern Plains remain hot and dry with more heat called for in the coming 7-10 days.
The weather models are still calling for rain across the Central US in the next week. Depending on the model, some of the heaviest rainfall has shifted to the South and East. The market will be focused on any updated forecast and changes to the expected rainfall amounts, particularly in IA and West. Heat continues in the Plains with the latest models calling for even hotter temperatures for the Upper Plains over the coming 7-10 days.
A report from Reuters yesterday suggested that US ethanol production will contract in the coming months due to tighter than expected corn supplies and higher costs. We have seen it before; ethanol plants simply will not run if producing in the red.
Corn prices in China have dropped to the lowest levels since December due to record imports. Imports of the grain to be used in feed has increased 5x this year compared to last and are expected to reach a record amount this year.
Have a Safe Day!
Garry Gard
920-348-6844
June 22, 2021
The rollercoaster continues this morning as corn is down 9 and soybeans are down 2 to start the day.
The USDA dropped US corn rating to 65% G/E last night vs. 68% last week. NE led the way at 83% G/E with OH, IN and WI next in line. WI came in at 69% G/E which is down from last weeks 71%. The most notable drops were in MN which was down 8% at 50% and IA which was down7% at 56%. While numbers were down, most expect they will turn higher next week as the rains we received across the corn belt late last week were very beneficial and hadn’t yet impacted the crops as of this survey time.
The weather models are calling for rain across the Central US in the next week. Amounts are in a wide range of 2-6 inches. Illinois and Missouri have the most rain in the forecast and it tapers off as you move West. Its going to be hot in the far Western plains and relatively mild in the Central US. The actual timing of the rain is for this Thursday/Friday and then again around July 4th.
China soybean imports totaled 9.0 million tons in May, lower than last May. On the other hand, June imports are projected at 11.6 million tons, the all-time high monthly imports, primarily due to massive arrivals of Brazilian soybeans (11.4 million tons). In addition, 8.3 million tons of soybeans have departed from the loading ports and will arrive in China in July. According to Refinitiv’s trade flows, the majority of Chinese imports in June/July will be originated from Brazil. Meanwhile, China resumes soybean imports from Argentina and Uruguay in June/July after negligible imports over the past half year.
China’s imports of American goods slowed again in May, putting the purchase targets agreed with the U.S. in the 2020 trade deal even further out of reach. China bought almost $10 billion worth of manufactured, agricultural and energy goods from the U.S. in May, the lowest monthly total since October 2020. That took total imports to almost $157 billion since January 2020, which equates to 41.4% of the targets the two nations agreed at that time.
Producers should be actively making sales ahead of next Wednesdays USDA report. If we get more acres(which is expected) and weather stays the course, this market could have another setback that we don’t rebound from.
Have a Safe Day!
Garry Gard
920-348-6844
June 16, 2021
Good morning,
Stronger markets in corn and wheat to open the day as they trade 9 and 3 higher, respectively. Soybeans are currently down 3.
US weather has some rain in the forecast starting this weekend. A tropical storm is moving into the Gulf and should make landfall in New Orleans. Heat and dryness persist out in the Plains and all the way West. The forecast does not have any rain West of Iowa/Minnesota and the heat will linger into the end of the month. Conditions are as bad out West as the 2012 drought was for the Central Midwest. Crops are really going to suffer.
Central US weather is a mix between the models this morning. The GFS has significant rain falling in parts of Iowa, but most of that is to the East where the Tropical storm is expected to kick the ridge West and let moisture move North into the Midwest. The GFS has rain going from New Orleans to Wisconsin on this run. The EU model has none of this, the moisture is blocked out North of Kentucky. Iowa, Illinois and even Missouri get shortchanged on this rain event. These models are very different, and we cannot guess which one is correct. It’s probably some of both in the end. After this tropical storm moves through, the ridge comes back East bringing hotter temps and a return to the same Hot/dry pattern. If this rain is a miss, we will immediately rally prices up to the gaps left early this week.
Chinese state grain company, Sinograin, will auction off corn shipments it imported from Ukraine earlier this month to help ease high grain prices across the country amid tightening supplies and rising fears about inflation. Sinograin will sell 1.5 million bushels of corn on Friday, marking the second sale this month by the state-owned trading company as well as the first state corn import sales in years.
China’s premier pledged to farmers that the government will act to prevent excessive falls in local corn prices to protect grower incomes and ensure they can manage rising costs of fertilizer and land rent. (don’t see this support in the US)
Have a Safe Day!
Garry Gard
920-348-6844
ggard@didionmilling.com
June 15, 2021
Good Morning,
Weaker markets continue today as corn is down 17 and soybeans are down 15.
The USDA dropped the weekly corn ratings 4% last night to 68% Good/Excellent. IA was down 14, MN down 11 and IL down 6. Wisconsin was reported at 71% G/E compared to 76% last week. National soybean ratings were down 5% on the week with 62% rated G/E. WI came in at 65% G/E compared to 72% last week.
Weather continues to be the driver in the market with cooler and wetter forecasts in the coming week. The temperature forecast is for hot temps over the next couple days, before a breakdown of the Ridge on June 20th. Temps cool out into June 25th, when the Ridge moves back in. A Tropical storm looks to shove the Ridge back out West letting Gulf moisture up into the Midwest.
Forecast changes are going wreak havoc on the markets going forward. Any significant changes for the better or worse are going to flip the markets. I don’t think the market is over as July and August are where crops are made, but I do believe the highs are in barring any dramatic change in weather. We should have another chance at selling new crop corn on any weather bounce and these bounces should be met with strong sales.
Have a Safe Day
Garry Gard
920-348-6844
ggard@didionmilling.com
