Good Morning,

Markets are mostly higher as fears that US processing plants could close due to infections of the COVID-19 virus continues to rise. The infections could prove challenging as workers and truck drivers who potentially have contracted the disease cause a reduction in processing capacity. Most millers/processors have contingency plans they can put into place to keep plants running; however, many questions remain as to just how world supply chains and logistics will handle this situation as the spread of the virus continues to quicken.
Corn continues to struggle as the fall in crude oil prices weighs on ethanol demand. Besides the price war between the Russians and the Saudis, US ethanol will struggle with reduced domestic demand as American shelter in place and curtail their gasoline demand.
Beans are seeing strength after Chinese soy meal futures closed up the limit due to the tight supplies as livestock producers there restock their feed needs. Prices there are getting a boost from the policy that any vessel offloading soybeans must clear a 14-day quarantine in an effort to fight the spread of COVID-19. That’s not to say it all will come from the US as some 11 MMT of beans are in transit from Brazil and will arrive in the weeks ahead. Nevertheless, the restocking of the Chinese pipeline will be an important feature in any recovery in prices heading into planting season here in the US.

Have a Safe Day!

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

Good Morning,

Markets were higher overnight with short covering and news that China appears to have stepped up and bought corn, beans and wheat in the last 48 hours. Concerns over supply from South America have been fueled by the coronavirus outbreak in South America and weather concerns. This may lead to more long term support in the markets, but short term the virus and oil wars are going to lead the way.
Demand destruction caused by COVID-19 and a falling energy market due to overproduction in Saudi Arabia and Russia are having a major impact on demand. Research done by a private analyst suggests we could look for a 12% drop in demand for gasoline in March, a 40% drop in April and a 20% drop in May. That is over 8.6 billion gallons of demand for gasoline due to limited or postponed travel. That means a demand drop in ethanol equivalent to o 331 million bushel of corn in 2020! Ethanol plants are slowing down or shutting down daily across the country as demand disappears and margins fall to unseen levels.
Corn is unchanged, soybeans are up 9 and wheat is up 2 to start the day. There will be a lot of fluctuation as stories about the virus swing the markets back and forth.

Have a Safe Day!

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

Good Morning,

Corn continues to grind lower while soybeans and wheat have stabilized. Corn is down 7 while soybeans and wheat are both up 4 to start the day.

Selloffs in commodities due to both the coronavirus pandemic and an ongoing trade war between Russia and Saudi Arabia is putting a squeeze on US ethanol producers; with gasoline futures now down to their lowest levels since they began being trading in 2005, ethanol producer margins are deeply in the red; much of this negativity is being driven by the crude oil price war between Saudi Arabia and Russia and that battle does not appear to be ending any time soon. Plants across the country are slowing down or shutting down and most are drastically widening basis levels due to the current margin levels.

There is talk that China may be looking for US soybeans, US fob soybean prices are now competitive vs Brazil. Soymeal could be supported by continued confusion over Argentina export situation. This week private estimates of Brazil and Argentina soybean crop were lowered due to dry weather.

Producers with old crop corn should be making sales and locking in current basis levels as this will continue to get worse with ethanol demand dropping sharply with severe restrictions on travel.

Have a Safe Day!

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

Good Morning,

Corn and soybeans are both trading 6 lower this morning while wheat is down 10. Crude is below $29/bbl and the Dow is 2300 to start the week.
The Federal Reserve also announced a buyback program of $200B of mortgage-backed securities and $500B in Treasury notes to prevent the coronavirus pandemic from leading the US into a recession. The Fed and other central banks have dramatically stepped up efforts to stabilize capital markets and liquidity, yet the moves have so far failed to boost sentiment or improve the rapidly deteriorating global economic outlook.
According to John Hopkins University total COVID-19 infections have now topped 169,000 with more than 6,500 deaths attributed to the disease around the world. Here in the US infections rose by nearly 3,800. The rise in US infections is to be expected to grow as the testing programs around the country are are just now ramping up. Last week’s announcement of the outbreak being reclassified as a pandemic has led to a massive economic slowdown across the US as schools close and companies reduce production, sending workers and students home to prevent the spread of the disease.
Producers that need cash flow in the next couple weeks should pull the trigger now and make the sales as there doesn’t appear to be an upside on the horizon. Producers that have grain in storage and are financially stable should still be moving grain to maintain quality in bins. Give us a call to find out what options we have for cash and deferred pricing of corn.

Have a Safe Day!

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

Good Morning,

The day is off to a very rough start after President Trump spoke in a prime-time address from the Oval Office, announcing sweeping new restrictions on travel from Europe and scattered executive actions to help workers and businesses rocked by what he labeled a “foreign virus.” The situation is evolving so quickly that even he misspoke when he was “suspending all travel” from Europe and suggested they would also apply to trade. The President later tweeted that trade wouldn’t be affected and the Department of Homeland Security clarified that the restriction applies generally to foreigners who’ve been in Europe within 14 days.
Unfortunately, grain and soy markets are following equity markets lower over worries that all of this turmoil surrounding this virus will slow the world Ag trade. South America continues to be an aggressive seller with Argentine corn offered about $0.18 under the US for April, but $0.41 under for July. Soymeal out of Brazil is being offered $25 less than shipments originating out of the Gulf. Adding further pressure are Russian wheat values that have fallen to new seasonal lows.

There is no way of knowing where or when this will end. Risk appetite has disappeared, dramatic (panic) action is being taken against Covid-19 creating panic and the impact on jobs and the world economy cannot be estimated – but it won’t be favorable. The virus will get worse before getting better. It will end sooner than later. People will eat. Grains will be sold. Grain will be moved. Crops will get planted. Animals will be fed. Foods will be made and consumers will continue to buy.

Producers that need cash flow in the next couple weeks should pull the trigger now and make the sales as there doesn’t appear to be an upside on the horizon. Producers that have grain in storage and are financially stable should still be moving grain to maintain quality in bins. Give us a call to find out what options we have for cash and deferred pricing of corn.

Have a Safe Day!

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