July 10, 2018
Good Morning,
The corn market gave back Friday’s gains and then some over the last 24 hours. We are down 15 cents in corn over the last two days and down 22 in soybeans in that same timeframe. This type of trade is why I believe producers should have firm offers in place to take advantage of any technical rallies that the markets may give us.
The markets will likely trader lower as traders begin to look towards Thursdays WASDE report and extended range forecasts that call for temperatures to moderate in the latter half of July.
Traders will continue to bearish the market until we see US and Chinese negotiators sit down for meaningful talks which there appears to be no solid timeline on.
Yesterday afternoons crop ratings showed US corn at 75% Good/Excellent compared to the five year average of 70%. This is 10% better than last year. Wisconsin came in at 83% Good/Excellent which compares to 75% on the five year average and 69% last year. The only states coming in below their five year average were Missouri and Kansas. Soybean conditions came in at 71% Good/Excellent for the US compared to 67% on the five year average. Wisconsin soybeans came in at 81% Good/Excellent.
Have a Safe Day!
Garry Gard
920-348-6844
July 9, 2018
Good Morning,
We finally saw some strength in the markets on Friday with corn up 8 and beans up 37. 25% tariffs on $34 billion of Chinese imports took effect Friday as well as retaliatory tariffs from China (which included soybeans). China cancelled about 370k metric tons of soybeans this morning (which equates to about 10-11 million bushels), but the old adage “sell the rumor, buy the fact” held true and lent itself to commodity strength to end the week.
Now that the tariffs are in place traders are watching to see what happens next. Will we see negotiations increase or will more tariffs be slapped on. So far, it is unclear how China intends on meeting its protein feed needs without eventually buying beans from the US. Brazilian beans continue to be offered at around a 17% premium to US beans. Prices for October out of Brazil are already trading at a 20% premium to those out of the Gulf, suggesting we are quickly closing in on the level where shipments can still work even with the 25% tariff in place. Regardless, other countries have taken advantage of the price discrepancy and bought US beans on the way down leading to weekly export sales that came in larger than expected.
Weather looks to be warm and dry this week with cooler and wetter conditions forecasted for next week across the corn belt.
The markets have opened 6 lower in corn and 16 lower in soybeans indicating that Friday’s short covering may have been overdone.
This could be a very volatile week with crop progress out this afternoon and the USDA’s Supply and Demand report released on Thursday.
Have a Safe Day!
Garry Gard
920-348-6844
July 5, 2018
Good Morning,
The markets will open at 8:30 am this morning after a shortened trade on Tuesday and 4th of July holiday. Some look for a higher corn and wheat open due to ongoing talk of lower World 2018/19 supplies. Still the dominate factor is the trade wars with US and China, EU, Canada and Mexico. Deadlines for US tariffs on China are tomorrow. China has said they will retaliate immediately with tariffs of their own if this is not resolved. This could offer resistance to grains especially soybeans.
North Dakota, South Dakota, Minnesota and parts of Iowa saw rains yesterday. Precipitation appears to be light for the next 7-10 days across the major growing regions while temperatures are expected to moderate with highs mainly in the 80’s. The chances of any premiums being added to the markets from weather are becoming unlikely this late in the game.
Producers should have firm offers in for old crop slightly above the current levels. $3.30-3.40 range would be my target. New crop offers should be handled very similar with offers in the $3.40-3.50 range for fall delivery. I would not recommend any sales for next spring and summer at this time in hopes that our political issues can be resolved by that time. Over the last 10 years, 90% of the time the December futures have traded higher than the current level. Over the last 5 years it has traded higher 84% of the time. I feel that fundamentally we are trading 25-30 cents below where the market should be due to trade wars.
Have a Safe Day!
Garry Gard
920-348-6844
July 3, 2018
Good Morning,
Corn is trading higher this morning on this Holiday shortened week as the bears look to cover some short positions ahead of the 4th of July. The markets will close at 12 today and not open until 8:30 am on Thursday.
Fridays deadline for the implementation of the $38 billion of tariffs between the US and China continue to hang over the markets. At this point everyone is assuming the worst and is hoping for the best as traders expect the tariffs will go into effect as planned on the 6th. This morning President Trump tweeted out the following:
“The economy is doing perhaps better than ever before, and that’s prior to fixing some of the worst and most unfair Trade Deals ever made by any country. In any event, they are coming along very well. Most countries agree that they must be changed, but nobody ever asked!”
This appears rather upbeat considering the looming trade war and the negative impact it has had thus far on the Ag sector.
Yesterday’s crop conditions report showed corn down 1% to 76% G/E. Soybeans were down 2% on the G/E rating to 71%. Most of the drop in ratings was attributed to regional heat and dryness last week.
Have a Happy and Safe 4th of July!
Garry Gard
920-348-6844
July 2, 2018
Good Morning,
My hope was that the end of June would mean better things to for the markets but the first trading day of July is not looking that way. Corn is down 7, soybeans down 12 and wheat is down 8 to start the month. During the month of June, corn was down 42 cents, Soybeans were down $1.54 and wheat lost 83 cents.
Fridays acreage and stocks report did very little to stop the bears with higher acres and quarterly stocks in corn reported. Corn acres jumped to 89.1 million which is a million more than the March report. There is talk that this number could increase when the final acreage comes in January. With acres at 89 million plus and a yield of 175 bpa and demand remaining unchanged we would be looking at a carryout of 1.6 billion bushel which would signal higher prices. Keeping demand at last years level with the current tariff talks will be very difficult. Traders will be closely monitoring any potential trade talks this week with Friday being the tariff implementation date set by the Chinese. The 25% tariff will keep the markets under pressure as we wait for updates.
Weekend rains west of the Mississippi with nearly all of Iowa and many parts of Nebraska and Southern Minnesota receiving modest rains eased the concerns of the hot weekend temperatures. Weather forecasts show temporary relief to start the week before a hot and muggy Fourth of July. Low 90’s are expected in most of the Midwest by the middle of the week with a cooler trend and less humid by the weekend.
Have a Safe Day!
Garry Gard
920-348-6844
