January 6, 2021
Good Morning,
Corn and soybeans are trading 4 and 20 respectively this morning. Overnight March and May corn on the CBOT traded above $5 which was seen as a ceiling by many traders. We have blown thru all of the previous ceilings ($4, $4.50, $4.80) so it will be interesting to see if we can get a close above that level. With continued sales being made to China the markets are working to quell demand. The recent strength in the Chinese Yuan in relation to the US Dollar has made Chinese purchases easier. The strength in the Yuan is self inflicted by the Chinese government and is making this long term strength very questionable. Overnight Crude oil topped $50/bbl for the first time in close to a year which is positive news for the corn markets. This jump in oil was due to Saudi Arabia agreeing to cut oil production by 1 million barrels per day in the months of February and March.
I will continue to preach that producers need to be taking advantage of these markets as they are not sustainable. The markets are reacting as they should to curb demand and the inverses in the market show how quickly they are doing it.
Have a Safe Day!
Garry Gard
920-348-6844
January 5, 2021
Good Morning,
Markets are stronger this morning with corn up 6 and soybeans up 29. Will todays trade be the same as yesterday? Yesterday was a wild ride, and today may not be much different. The markets were up these same levels yesterday before closing lower on corn and 1 higher in soybeans. If we are trading weather, the change to wetter in Argentina would produce a lower trade. I don’t know where we close today, but we are definitely in the volatility stage of the market. Trade gets nasty on highs and lows.
On Monday, Managed funds were net buyers of 2,000 wheat, net even corn, bought 5,000 soybeans. Funds are estimated to be net long 36,000 contracts of SRW Wheat; long 357,000 Corn; net long 222,000 Soybeans.
The forecast has a significant change to a wetter forecast for Argentina and Southern Brazil. The forecast into Jan 15 has the most rain forecast in months. Should this forecast hold true, this would be the crop saving rains that Argentina has been looking for. So far, most of the forecasts for Argentina have gone bust. A confirmation of the mid-day forecast and again tomorrow morning, may give traders a pause in the buying. Northern Brazil looks to get very good rains over the next 10 days which will help later planted crops. Some early beans are already being harvested, with yields down between 10 and 40%.
As I stated in yesterdays comments, this rally is not sustainable and producers should be making sales of old and new crop corn and soybeans. These are profitable levels for all operations and should be captured.
Have a Safe Day!
Garry Gard
920-348-6844
ggard@didionmilling.com
January 4, 2021
Good Morning,
Happy New Year! That’s definitely the way things are starting out this year with markets continuing their rally from late 2020. Overnight corn was up 6 while soybeans were up 28.
The Chinese currency in relationship to the US Dollar is the news this morning as these currencies are headed in the opposite direction. The weaker US Dollar and much stronger Chinese Yuan are making the Chinese buying power much stronger. The Yuan is managed by the communist party and they appear to be making a statement here as they are looking to import grains and meats from the world suppliers.
I do not see this recent rally as a positive for US producers long term because it is not sustainable. Higher prices result in rationed demand and this has already begun. Last weeks ethanol production and stocks report showed production down 42,000 bpd from the previous week and 132,000 bpd from 2019. We also saw stocks increase 14 million gallons from the previous week and 104 million gallons from the same time last year.
Producers should be actively making sales of old and new crop corn in the coming week before we get to the USDA report next week. This recent rally in the CBOT has and will continue to deteriorate basis levels across the country. No one knows where the end is, but my opinion is that we are very close to the top and could see a major setback in the markets. “High prices cure high prices”!
Have a Safe Day!
Garry Gard
920-348-6844
December 24, 2020
Good Morning,
Markets are calm this morning with the markets closing at 12 and most traders off for the holidays. Corn is up 1 and soybeans are up 3 at the time of this writing.
Chinese bean demand has been the catalyst for markets this week. China is expected to import more than 100 million tonnes of soybeans in 2020, a record high, said an executive with leading state-owned grains trader COFCO on Tuesday, as rebuilding of the country’s huge hog herd boosts demand for the protein. This has moved the needle on the bean market and thus pulled other commodities along as traders expect stocks to get even tighter in US soybeans.
The forecast for Argentina is wetter over the next 10 days, and the Southern Brazil forecast is much drier. Rain totals in Argentina range from .5 inches to 2.0 on the model run. If this hold true, it would be the best chance of rain in a month for Argentina. The last forecast change failed to hold up, with only trace amounts falling. The rain period is for Dec 26th-30th. Northern Brazil with see normal rain into the end of December. Temps are in the 100’s for Northern Brazil, and Argentina will be 80’s-90’s.
Funds are long 310,000 corn and 240,000 soybean contracts after yesterdays close. This is a signal that we could see some profit taking in the next week with month and year end profit taking.
Have a Merry Christmas!
Garry Gard
920-348-6844
December 18, 2020
Good Morning,
Overnight markets had corn unchanged and soybeans up 10.
Weekly corn export sales totaled 75.6 mb, the second largest week of sales for that date on record and sharply higher than the level needed weekly to hit the USDA forecast. Total commitments of 1.634 bb now account for 61.6% of the USDA’s estimate, the second highest ratio on record going back to 1990. The only area of the export sales report to raise an eyebrow at is the weekly shipments needed to hit the USDA mark which now stands at 60.4 mb. This would be a new record shipment pace from now through August with the second largest average program being 57.3 mb shipped per week in 2017/18. While Mexico was the largest buyer at 28.2 mb, China did show for 6.3 mb.
The well-followed firm Informa released their estimates for the January report and expect the USDA to cut their national average corn yield to 174.1 bushels per acre (bpa) vs. the USDA at 175.8 bpa in December. If demand estimates were left unchanged from the December WASDE, carryout would drop to 1.558 bb and a stocks/use ratio of 10.5%. This would be the tightest stocks/use ratio since 2013/14’s 9.2% but would still not support prices above $4.50 on the CBOT based on historical stocks/use ratios. The January USDA reports could prove to be some of the more important in recent history, especially depending on how South American weather fares the next 30-days.
With shortened trading hours and days in the coming weeks and traders on holiday and year end vacations, I would expect markets to trade sideways in the coming weeks. The interest and market movers continue to be South American weather and the January crop report.
Have a Safe Day!
Garry Gard
920-348-6844
