Good Morning,

Prices are starting the week mixed with corn down 3 and beans up 3 this morning as Chinese traders return from the week long Lunar New Year Holiday to hammer China’s financial markets. China’s stock market opened to the worst wave of selling in years with thousands of shares falling by the daily limit after just minutes of trading. It was the first chance investors had since January 23 to trade, due to the extended Lunar New Break. The selling has not been confined to the financial markets with commodities also taking it on the chin.
The outbreak of coronavirus will likely reduce China’s ability and willingness to buy huge amounts of US ag produce, as agreed to. It has already been reported that China is seeking “flexibility” on phase one trade commitments as it focuses its resources on the control of coronavirus.
South American weather forecast features normal to above rains in Brazil and normal rainfall for Argentina. Overall conditions are positive for all of South America and 10% of the soybean crop in Brazil has now been harvested. The weather forecast is predicted to remain favorable for Argentina as harvest activity will start to pick up there as well.

Have a Safe Day!

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

Good Morning,

The markets have been falling hard this week with corn off 10, soybeans off 30 and wheat off 14. Continued panic around the virus in China has traders moving money to the sidelines and safe havens. Funds are short 81k corn and 58k bean contracts. They haven’t been this short in corn since the week prior to the January WASDE report.

China has not been offloading ag imports because of the risks of spreading the virus to other nations seemed to increase the panic of traders. This has resulted in the Chinese buying less over the last 10 days due to the congestion that is going t result with all of their previous purchases arriving.

China has confirmed are rise to 9,809 cases from 7,700 yesterday. Many think, and are probably correct in that the spread of the coronavirus is under reported. Hong Kong schools will stay closed until March 2, depending on the outbreak of the coronavirus situation. Russia has reported two confirmed cases overnight. Two cases have also been reported in the UK.

The models for South American weather are adding to rainfall totals next week in Argentina. Wednesday through Friday of next week look to receive 1-3 inches of rain. Coverage amounts are expected to be 80%. This would seem like a pretty normal summer pattern, with a week or two of dryness here and there. The crop still needs to be finished, but this buys another week or two. Rain totals in Brazil will stay on the wet side in the 10-14 day forecast.

Have a Safe Day!

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

January 29, 2020

Good Morning,

After yesterday’s slight bump higher in the markets corn is off 2, wheat off 6 and soybeans are unchanged to start the day. Corn is back in the middle of its recent range and soybeans are on the lows of the year.
Traders remain concerned about the impacts of the current outbreak and have been moving money to the safe havens of the trade. (Gold) About 5,974 cases of Cononavirus have spread across China a 25% rise, with 132 reported deaths. British Airways said it will halt flights to Beijing and Shanghai, joining many other carriers. Toyota Motor Corp is halting operations in China until Feb 9th. Financial markets in China will open next Monday.
Food supplies in China are running out as people are clearing the grocery shelves, and stock piling food. China is going to have to ramp up imports in the meat supply, which was already too low. I think you can expect large purchases of US Ag goods immediately.

President Trump is going to sign USMCA into law today, and the ceremony will be held at the White House. Canada must still ratify the bill, but this is headed towards a conclusion.

Have a Safe Day!

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

Good Morning,

Markets are off sharply this morning with corn down 8, soybeans down 10 and wheat down 7. Fears of the rapidly spreading coronavirus have traders with a “risk off” mentality to start the week. All three components of the CBOT are seeing liquidation in active trading. The reason we are seeing this hurt our markets so much is that there is just so much unknown about the virus. The rapid spread of the disease is definitely alarming with the latest speculation surrounding the possibility of an incubation period of over 2 weeks before the symptoms emerge.
Deaths in China climbed to 80, the National Health Commission said on Monday. That’s up from only two just over a week ago. There are 2,744 confirmed cases on China’s mainland, and more than 30,000 people are under observation. 56M people have been quarantined in an effort to slow the spread of the disease; however, Chinese authorities said the virus isn’t yet under control despite aggressive steps to limit movement for millions of people who live in cities near the center of the outbreak. Mainland China accounts for 98% of confirmed global infections, while more than a dozen countries and territories reported the illness within their borders. The WHO said that of 29 patients with infections outside China, 26 traveled through Wuhan.
So far we have 5 cases reported here in the US and daily life has yet to be affected. 3 of them have been confirmed within the last 24 hours: two in Southern California and one in Maricopa County, Arizona. All the patients had recently been in Wuhan and are hospitalized. Their close contacts are being monitored for signs that they may be developing the disease, the Centers for Disease Control and Prevention said Sunday.
South American weather models continue to look favorable with improved chances for more normal precipitation across Argentina. In Brazil, nearly all the crops should enjoy near normal rainfall as well with totals ranging from 1.5″ to 4″. This favors a soy crop that is still in the middle of reproduction. High temps range from the 80’s to mid-90’s. Additionally, early harvest reports out of Mato Grasso have bean yields running up 5% to 10% higher than last year.
The selling this morning seems to be a bit of an overreaction to all the news from the weekend. Granted the whole situation does possess the possibility to become another “Black Swan”, but as far as the Ag community should be concerned it is probably way too early to be drawing any conclusions.

Have a Safe Day!

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

Good Morning,

Softer to end the week is going to be the story today. Corn is currently down 4, beans down 5 and wheat down 8! Traders continue to be concerned about the impact of the virus in China and how this could impact trade. Weather in South America remains good for crops and bad for prices. Brazil has been getting about 4 inches of rain every week for the last two months which is making their crop bigger and bigger. Argentina weather has been normal for their growing season where they have had very few dry spells.
January is usually a bad month to make sales as we rarely see the market move higher to start the New Year. The graph below shows the CBOT action over the last 5 years by month. Historically we trade sideways October thru April with rally’s happening May thru July. The problem this year is that economics are still so bad for beans that no one is going to want to plant them again this year(outside of normal rotation). We will have high planting intentions for corn in March and whatever the price guarantee for corn in February is, we will lose that price on the March crop report. If you need to sell a commodity for cash, my advice would be to sell corn and keep beans. You should be selling old crop corn and new crop corn with futures at or near the $4.00 level. There are some really good basis levels for old crop corn. New crop basis levels are also at very good levels compared to where I believe they will be when harvest 2020 arrives.

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Have a Safe Day!

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