February 5, 2021
Good Morning,
Markets are 2 higher in corn, 10 higher in soybeans and 7 higher in wheat to open the day. Crude oil is up 40 and US stocks are up 130. The 1.9 trillion dollar aid package passed the US Senate dropping the dollar and sending stocks higher.
The corn fund position is still holding up toward record long with a crop report coming next Tuesday. The bean position is long but nowhere near what it was when we were 14.40 futures. The wheat position is slightly short, which is signaling a low for the week. After yesterdays close the funds were long 380,000 corn, 157,000 soybean and 60,000 wheat contracts.
China’s Veterinary Association did confirm that a strain of African Swine Flu was found this week. They do not expect damage to the growing hog industry as the strain is not as deadly as the previous strain.
The Buenos Aires Grain Exchange lowered the corn crop estimate for Argentina to 46 mmt which is equal to their soybean crop at 46 mmt. They are saying that the soybean crop is 19 percent good to excellent vs 65 last year and corn at 24 percent good to excellent vs 59 last year. These are the worst condition ratings we have seen posted for the Argentina crop. The Southern Argentina corn bean crop are probably going to show much worse yields than expected come harvest.
We only have a couple trading sessions before the USDA release the February crop report. The trade looks for US corn carryout near 1,392 mil bu vs USDA 1,552, soybean 123 vs 140 and wheat 834 vs 836. After all the sales made to China in the last month, the USDA is going to want to reduce carryout and raise exports. The recent corn sale would take out 300 million bushels of carryout that was done just in the last week.
Have a safe day and stay warm!
Garry Gard
920-348-6844
February 4, 2021
Good Morning,
Markets were stronger overnight but have opened lower this morning. Corn and beans are down 3 and 5 respectively.
Weekly export sales came in at a near record 292 million bushel for corn.
Actual sales lived up the hype with 7,436,500 mt of corn, 643,100 wheat, and 824,000 mt of beans. Sales were good in all commodities, even at these higher prices. You kind of have to wonder where China is going to put all these products and if they will actually take delivery of them.
US Ethanol production for the week ended Jan 29 totaled 936,000 bls per day (up 0.3% vs a week ago, down 13.4% vs a year ago); Stocks were 24.3 mil bls (up 3.0% vs a week ago, up 3.6% vs a year ago); Corn use 94.6 mil bu vs 94.3 mil last week and 94.6 mil needed to meet USDA projections.
US ethanol inventories have returned to highs last seen in the early days of the Covid-19 pandemic, according to data from the EIA. The EIA reports that ethanol inventories rose 714,000 barrels in the past week to 24.32 million barrels — the highest inventories have been since early May. The inventory build-up appears to show the effect of coronavirus on people using their vehicles regularly. Meanwhile, ethanol production only inched up 3,000 barrels daily to 936,000 barrels per day.
Trade in both directions and big swings are to be expected in the current market place headed into spring and early summer. Timing of your sales is going to be the challenge. With prices at record levels for the last several years, producers and commercials have been active sellers. This is filling the pipeline at local end users which is making it difficult for producers to move unsold corn and beans nearby for any cash needs.
Have a Safe Day!
Garry Gard
920-348-6844
February 2, 2021
Good Morning,
Markets are lower to start the day with corn down 4 and soybeans down 10.
Looking at the positions, the funds are incredibly long corn. The long position of 400,000 is back towards a record. Price risk is very high in corn, similar to when beans were loaded up 300,000 long a few weeks ago. The corn market is at risk of a 20 cent lower day at any time. The volatility has been increasing since the January 12th report, so the down days are going to be more extreme as well. There has been an awful lot of 6 dollar corn price talk in the community, from traders I know who rarely even trade corn. We are likely getting to the point where the corn market is going to reset the range with another correction. How much more can the funds buy and where does it drop to when they take profits?
News is pretty limited, and that probably has a lot to do with overnight trade. New crop corn has been unmoved and has mostly settled into prices close to 4.40 for many days. Big acres on the horizon for both corn and beans will keep next fall’s futures more subdued. Traders are really bullish corn, but I view it as dangerous. Getting caught up in the bullish euphoria and buying in on the 400,000 long position in corn looks like a bad idea for traders right here, until there is a substantial clean out of position.
Have a Safe Day!
Garry Gard
920-348-6844
January 29, 2021
Good Morning,
Word of the day or should we say days = VOLATILITY!! The corn market opened 10 higher this morning and in less than 30 minutes is trading 2 higher. Soybeans traded 18 higher and are now down 10! I look for these huge swings to continue for a while until we see some break in the export news. Ranges are expanding with the higher prices. Yesterday saw a 40-cent range in soybeans, with a hard technical break after the US export sales data was digested by the trade. The market has made a habit out of selling off as soon as the numbers are released in the AM. The strong exports in both corn and beans should lead to higher prices, but it’s definitely not going to be easy or straight up.
China is said to be putting together a purchase order of 6-8 mmt of US corn. 2-4 mmts of new purchases have already been completed this week, and there looks to be another 4 on the horizon. It appears that China will book closer to 22 mmt of corn vs the 12 mmt the USDA is expecting. The export program out of the US is like nothing we have ever seen, especially for corn. The reality of these sales is that they have been in the works for a few weeks and were probably executed weeks ago and just now announced.
The new crop corn trading is much less volatile and should stay that way. With the expectation for large, planted acres this coming spring there is little reason to rally that market.
Unfortunately, producers that are sitting on unsold old and new crop are going to drive themselves crazy trying to pick the top in the market, which is not possible! You have a better chance of losing 50 cents than you do of hitting the top. Bottom line = make sales because prices are profitable, and you can reduce stress levels.
Have a Safe Day!
Garry Gard
920-348-6844
ggard@didionmilling.com
January 26, 2021
Good Morning,
Markets are firm this morning with corn up 15, soybeans up 27 and wheat up 14.
Rumors that China is booking corn and soybeans started the rally last night that has rolled into todays trade. Chinese purchases are due to the slow harvest pace in Brazil that is less than 2% complete at this time. This means that China is filling its February slot with US beans.
Russia has signed the 50 mt tax on export wheat that starts March 1st. There will also be a 10 mt tax on barley and a 25 mt tax on corn. Additional taxes may be levied against new crop production. The Ukraine is expected to limit exports to 24 mmt of corn down from 29 mmt last year. Domestic stocks are low in both the Ukraine and Russia following three years of difficult weather.
Rallies in soybeans and wheat are pulling corn higher. The market is going to be really volatile in the coming weeks as there are a lot less players willing to play in the markets at these high prices.
Producers should continue to take advantage of the rallies and make old and new crop sales. $5+ old crop corn and $4.20+ new crop corn are nothing to pass up. As we saw Friday, it doesn’t take much to sell this market off!
Have a Safe Day!
Garry Gard
920-348-6844
