Category: Agriculture

31 Mar 2025

Ag Market Update: March 12 – March 31

The March 31 Stocks and Acreage Report did not provide any fireworks as there were no major surprises in the report with the USDA saying there will be 95.326 million acres planted. While this is a large acreage number the trade and talk the last couple weeks was about the likelihood of the USDA coming out with a 95 number. While the report could have been worse, stocks coming in exactly in line with the estimate did not pile on with bad news. As we head toward planting, weather, South America and tariff wars will be the main movers now.

Via Barchart

Soybeans came in at 83.495 million acres as their lack of profitability at current prices is making farmers switch some acres to corn. As you can see from the chart below there have not been much help for beans but if this acreage number is close to what we see, it is hard to think they would dip much below $10. The post report action was disappointing as beans continued lower.

Via Barchart

Wheat had bullish news from the report as acreage came in 1.125 million below estimates. Wheat has some bullish world news for price with emergence concerns in the Black Sea and US Plains, despite recent price action. News out of the Black Sea and any issues with the US crop will be market movers for now.

Via Barchart

Equity Markets

The equity markets continue their volatile swings while President Trump’s “day of liberation” approaches on April 2 when tariffs are supposed to be going in place. Volatility will be the name of the game as many unknowns remain in the trade wars.

Via Barchart

Other News

  • Cotton acres came in at 9.867 million. This is 1.315 million acres less than last year. Cotton needs to see demand pick up to get back and stay over 70 cents/lb.

Drought Monitor

As planting approaches the drought monitor begins to become important again as subsoil moisture always seems to be a problem somewhere.

PRICES

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

 

24 Mar 2025

LEONARD LUMBER REPORT: It was a tough week for the cash market

The Lumber Market:

It was a tough week for the cash market as mills were forced to lower prices to get rid of excesses. Futures on the other hand, held value. It was a very slow volume week as the trade stayed on the sidelines. While this is normally a hard time to read the market, it is obviously much harder this year. A few keys to be watching:

  • I have been preaching about the high amount of inventory out in the field. Every week that number is reduced. A couple day run in cash could even things up and force the buyers back in. That remains to be seen, but there will be an uptick in usage.

  • I’m not a fan of the “underbuilt” hypothesis. There are too many dynamics that have to come into play to make it a factor. We saw them come into play during covid. When momentum to move increases we are far short of homes. What we have today is a two-pronged move being created. The first is once rates drop there will bring a ton of existing home inventory onto the market. That will create good sales but little anxiety. Once the trading of homes is completed, the market with feel the underbuilt condition.

The market has been in an uptrend since last July. I will have a chart below to show the trend. It tells me that the mills can no longer produce at breakeven or at a loss. The housing demand is too great for that. I said that a few years ago so take it with a grain of salt. Economics are economics and housing leads. As of today, it is looking up. Tariffs and duties are all transitory. Stick to the fundamentals.

Technical:

I love the gap on the chart below at 812.20. I know it was the old contract, but the algo and funds don’t give a shit. The next few weeks are going to be very volatile. The market could shoot $50 in either direction for a while. What if the market ran up to $720 and then down to $620. Is your risk managed?

We are going into one the most confusing week of all of our careers. Remember things never change. We will all come out of this at some point when reality is defined. Don’t get caught up in it.

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

 

Brian Leonard

[email protected]

312-761-2636

24 Mar 2025

Tariff Tensions Return: Will History Rhyme for Grain Markets?

What are we to make of the on-again, off-again tariff threats and realities flying around markets these past several weeks? Will this crush American consumers, hurt American farmers, or be the panacea Trump hopes for? Well, history doesn’t repeat, but it rhymes, as they say… and we’ve seen this movie before. 

The Previous Tariff Episode: A $13.2 Billion Lesson

When trade tensions escalated during the previous Trump administration, grain markets felt the shockwaves immediately. The U.S. Department of Agriculture’s Economic Research Service (ERS) quantified these impacts in stark terms: retaliatory tariffs from six major trading partners cost U.S. agriculture $13.2 billion from mid-2018 through 2019. (source: https://www.ers.usda.gov/amber-waves/2022/march/retaliatory-tariffs-reduced-u-s-states-exports-of-agricultural-commodities)

China’s implementation of a 25% tariff on corn, wheat, and cotton—along with tariffs on soybeans—was just the beginning. Mexico, Canada, the European Union, India, and Turkey all implemented their own countermeasures targeting American farm goods. The result? A perfect storm that destabilized agricultural markets across multiple sectors.

tariffs and U.S. Agriculture

The ERS analysis reveals how unevenly these impacts were distributed. Midwestern states bore the brunt of the damage, with Iowa ($1.46 billion), Illinois ($1.41 billion), and Kansas ($955 million) suffering the largest annual losses.

Soybeans alone accounted for 71% of total losses—a staggering $9.4 billion hit primarily absorbed by Midwest farmers. Sorghum producers (particularly in Kansas and Texas) faced $854 million in losses, while pork producers took a $646 million hit.

The Bailout Response

To offset these losses, the first Trump administration implemented an unprecedented farm bailout program. Over the course of these two years, the total bailout for farmers reached approximately $28 billion. This included direct payments to farmers, as well as additional programs aimed at purchasing surplus agricultural products and finding new markets for U.S. agricultural goods. 

So all good?  Not really….Farmer’s would rather earn their dollars, not be given them, as evidenced by this farmer’s quote in a 2021 article::

“Ultimately, my bottom line looks about the same as it did pre-Trump trade war, but much of that ‘income’ came in the form of Trump’s bailout,” Scott Blubaugh, an Oklahoma-based farmer and president of the Oklahoma Farmers Union, told Yahoo Finance. “Those are subsidies that I wouldn’t have needed if the trade war hadn’t happened. I’m grateful for the dollars to keep my farm afloat, but I’d much rather earn those dollars than be given them. The trade wars limited my and other farmers’ ability to earn.”

Market Volatility: Then and Now

So with all of that as the backdrop, what were markets doing in reaction to the tariffs 7 years ago? The market reactions in 2018 were substantial. Soybean futures fell from about $10.25 in early 2018 down to $7.50 in late 2018 as tariffs took hold. Yet remarkably, prices rallied all the way up to $16.75 by 2021 as China eventually resumed their buying.

Today’s market has shown more resilience. Despite renewed tariff talk, soybean futures have moved from $10.40 at their yearly high to around $9.80 recently—a much more modest decline than the 27% drop we saw in 2018.

Why the difference? Farmers and markets appear to be weighing several factors:

  1. Experience with the previous tariff cycle has taught exporters to diversify markets more effectively
  2. Current global supply and demand fundamentals differ from 2018
  3. Markets may be pricing in the possibility of targeted bailouts similar to last time
  4. Export sales data suggests global buyers remain active despite the uncertainty

 

market volatility then and now

What Farmers Are Worried About

The farming community’s anxiety about trade policy is reaching critical levels. According to a this CNBC article, the latest Purdue University/CME Group Ag Economy Barometer shows nearly half of farmers surveyed believe a trade war leading to a significant decrease in U.S. agricultural exports is “likely” or “very likely.”

Caleb Ragland, a Kentucky soybean farmer and president of the American Soybean Association, expressed deep concern: His family farm, potentially entering its 10th generation with his sons, faces existential pressure from policies “completely out of our control” that can manipulate prices by “20%, 30%” while costs continue to rise. “Tariffs break trust,” Ragland noted, pointing out that “the U.S. has yet to fully recover its loss in market share of soybean exports to China,” despite China being the world’s largest buyer of the commodity. “It’s a lot harder to find new customers than it is to retain ones that you already have.”

The timing couldn’t be worse. As Michael Langemeier, agricultural economist at Purdue University, explained, there was a 33% per acre drop in net return for soybeans and corn between mid-February and early March related to tariff concerns, coming when “2025 was not ending up to be an extremely profitable year before this.”

What has particularly alarmed agricultural economists is the shift in farmers’ policy priorities. “Usually when you ask a policy question, by far and away the most important policy is crop insurance,” Langemeier observed. “Crop insurance is right up there with apple pie and baseball… The fact that crop insurance was a distant second to trade policy speaks volumes.”

trade policy and farming

Looking Forward

As tariff rhetoric intensifies in today’s political climate, the agricultural sector watches with informed caution. The ERS analysis provides a roadmap for understanding potential vulnerabilities—particularly for soybean, sorghum, and pork producers in the Midwest.

The lesson remains clear: in our interconnected global economy, trade policy decisions reverberate through commodity markets with remarkable speed and force. For investors and businesses alike, understanding this history isn’t merely academic—it’s essential for navigating whatever comes next.

In this volatile environment, thoughtful risk management has never been more essential—not just for grain producers, but throughout the entire agricultural supply chain. Those who implement diversified marketing plans, maintain liquidity buffers, and secure flexible financing arrangements will be best positioned to navigate these uncertain waters. While no strategy can fully insulate against geopolitical shocks, a disciplined approach to risk management may be the difference between weathering the storm and becoming another casualty of trade policy crossfire.

17 Mar 2025

LEONARD LUMBER REPORT: SHIFT TO A “COST OF SUPPLY VS DEMAND” MARKET

The Lumber Market:
There has been a shift from a supply and demand market to a “cost of supply vs. demand” market. By that I mean the actual supply does not have a relationship with its cost. The cost will be driven by a tariff charge. Let’s separate the two. If there were not any tariff threats facing the market today, the slack demand would be pressuring the market lower. I have seen so many times in the past of a spring that never developed. The wood bought covered the wood needed. It’s starting to have that type of feel. Let’s take a step back. Futures are up $120 from the lows this year. We are putting it all on the tariffs, but part of it could have been the spring run. I’ll say that because demand lacks any momentum. If the tariffs came out tomorrow, prices would go up, but demand would not. I am not calling for demand to slow. I just want to be clear that today we are an “cost of supply market.” Any other year it would be a sell in May and go away. This isn’t any other year.
There are two types of hedging. The first is basis trading locking in a profit. The other is risk management or the protection of the company. This medical insurance comes at a cost and always gets questioned by the higher ups, until it works. You have to have inventory. You also have a plan to protect it in place.
Technical:
The Bollinger bands are slowly moving back together. There is a long way to go, but viewing the market getting range bound is the play until something comes out. There is a strong support line in May sitting at 632.40. I think the focus this week should be on the chart pattern in futures and not on any rumored tariff garbage. I’m not positive, but I heard of spreads on DraftKings between a college bball teams and lumber are getting sent out.
Daily Bulletin:
The Commitment of Traders:
About the Leonard Report:
The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors. 

Brian Leonard

[email protected]

312-761-2636

13 Mar 2025

AG MARKET UPDATE: FEB 14 – March 12 USDA REPORT

First Glance:

Quiet report with no real changes made in production. The dark cloud over the market of tariffs was not addressed in a major way in this report as the demand picture remains blurred by how long the trade war could last. Nothing from the report changes the trade in a meaningful way for corn, soybeans or wheat.

Corn             24/25 US Corn Stocks:  1.540 BBU (1.516 BBU Estimate)

                       24/25 World Corn Stocks:  288.94 MMT (289.93 MMT Estimate)

                       24/25 Brazil Corn Prod: 126 MMT (126.07 Estimate)

                       24/25 Argentina Corn Prod: 50 MMT (49 Estimate)

 

  • Corn had a boring report with balance sheets remaining unchanged across the board. Global corn stocks were slightly lower and China imports were 2 mmt lower. Corn needs to get through technical resistance at the 50 day moving average ($4.59 ½) to see a move higher, it is currently trading at $4.55.

 

Beans        24/25 US Bean Stocks:  380 MBU (379 MBU Estimate)

                    24/25 World Bean Stocks:  121.41 MMT (124.56 MMT Estimate)

                    24/25 Brazil Bean Prod: 169 MMT (169.18 Estimate)

                    24/25 Argentina Bean Prod: 49 MMT (48.88 Estimate)

 

  • Beans did not receive much news as US bean stocks remained the same while lowering world ending stocks 2.93 mmt. The one item of note is that the USDA lowering the seed usage 3 mbu, potentially hinting at a lower bean acre number.

 

Wheat        24/25 US Wheat Stocks:  819 MBU (797 MBU Estimate)

                     24/25 World Wheat Stocks:  260.08 MMT (257.62 MMT Estimate)

 

  • Wheat was slightly changed this month with larger supplies, higher consumption, reduced exports and an increase in ending stocks. Exports were lowered for the EU, Russia and the United States. While not by large amounts (0.9 million tonnes) it was enough to move the market slightly lower with no big news in corn or beans.

Overview:

A quiet report as the market looks elsewhere for news to dictate trade. As China gets involved in the tariff war with Canada and Trump steps up tariffs on some imports while delaying others, there remains more questions than answers. News from the White House will be the main market mover moving forward until the planting intentions report at the end of the month. While South American weather is not a problem currently that is always a variable to keep an eye on as their second crop begins to take shape.

Note from the report: “The WASDE report only considers trade policies that are in effect at the time of publication. Further, unless a formal end date is specified, the report also assumes that these policies remain in place.” This is important because US tariffs on Canada and Mexico were delayed until April 2 on all products covered by the USMCA meaning theses numbers are estimates if this is resolved before then.

Equity Markets

The equity markets have given up all gains since the election in November as trade wars and tariffs dominate the headlines with the chip stocks and market leader Nvidia getting hit hard as recession fears ramp up. The global markets, after lagging the US markets for several years coming out of Covid, have ramped up recently, having a better start to 2025.

Via Barchart

Other News

  • The tariff war is up and running as everybody tries to out tariff each other. How long this lasts will ultimately decide how much economic damage is done.
  • Canada has a new Prime Minister after Trudeau stepped down and Mark Carney from the liberal party took the position.

04 Mar 2025

LEONARD LUMBER REPORT: “Lumber, lumber, we don’t need no stinkin lumber.”

The Lumber Market:

“Lumber, lumber, we don’t need no stinkin lumber.” Or is it, Badges? Trump is coming after the Canadian lumber industry with both barrels. The problem is the current Canadian government does not like or support the industry so who’s on their side? The biggest and very unintended consequence of all may not be sharply higher prices but a real slowdown in the US housing sector. It is already fighting just to stay flat. This may just send investors to other markets, thus reducing the dollars available in the housing sector.  You cool the housing sector, and you will cool inflation. Again unintended.

This is one of those times where you plan for the worst and hope for the best. It is also a time when you could have $750 lumber and no customers.

Technical:

I was dead nuts on last weekend stating that for the market to go higher it would need a sharp sell off. We saw that on Wednesday and keeping to new lumber style, it all happened in a few minutes. That’s how we roll these days. What I missed was the timing. I think we have to take a step back and consider that while the technical read tends to pan out, it now occurs in minutes not days or weeks. We have to project the move and have orders in to take advantage. Don’t freeze on winners. Manage the position based on what the cash market would offer you. More importantly, don’t freeze on losers. Get out.

Sticking with the boxing analogy…. “hit the one in the middle.”

Daily Bulletin:
The Commitment of Traders:
About the Leonard Report:
The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors. 

Brian Leonard

[email protected]

312-761-2636

24 Feb 2025

LEONARD LUMBER REPORT: The futures market continued to rally last week

The Lumber Market:

The futures market continued to rally last week. This time, the driver was the fund liquidating shorts. Two weeks ago, it was a substantial cash trade. Last week, it was the roll and liquidation. The cash trade was good last week, but the futures trade was all fund related. On Friday, a mill went off the market, which resulted in nary a ripple in futures. At this point, we need a third catalyst to help the market higher.

Factors to watch:

  • A slowing Euro supply

  • Quota information (If the producers get the funds back as usual, this is only a forced savings account and should not be added to the final cost.)

  • I’m not sure, but I think we went through a day or two without the President calling out lumber. At some point, you will have too much wood or not enough. Those with too much wood can hedge at a premium and wait it out. Those who do not have enough should go back to the old-fashioned way of buying deeply discounted items and running with those until the smoke clears.

  • Spring… misery loves company, so any consistent warm weather will wake the stragglers up. ( This is not a market factor. Anytime we went into spring bullish, we would find the wood was already bought and delivered.)

 

Technical:

The market broke out to the upside of the wedge, which measures $648. I am still in the camp where the market is headed. The issue developing is that this week’s trade shows up on the charts as a big negative. Lumber historically doesn’t creep higher and then explode up. It tends to trade sharply lower for a day or two. Fund liquidation won’t get the market to $648. Adding new shorts will.

If the market sentiment, which is about 95% bullish, can turn down, some higher levels will be hit.

Daily Bulletin:
The Commitment of Traders:
About the Leonard Report:
The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors. 

Brian Leonard

[email protected]

312-761-2636

17 Feb 2025

AG MARKET UPDATE: JANUARY 27 – FEBRUARY 14

Corn rode the wave higher following the updated USDA numbers in the January report with old crop prices settling into a range and 2025 steadily moving higher. The funds are long 1.8 billion bushels and staying long which is helping this market higher with the general fear being a huge corn acreage number for this year that could present a problem. South American weather remains consistent with non-threatening forecasts while the US has a striking cold few days coming. There are multiple items supporting a continued grind higher from here, but funds have their hand on the scale so keeping an eye on what they do and what the technicals are saying will be important as well as harvest data out of South America. It is never too early to look at making sales for the 2025 crop year once you know your breakeven. You can always look at re-owning it on paper if the market really makes moves higher.

Via Barchart

Soybeans have been trading flat since the January USDA Report bump. South America’s record crop present price challenges to the US as we are not the main supplier for the world anymore. A renewed trade war with China would certainly have negative effects again on the soybean market. South America yield numbers and any tariff wars will be the main news in the market until planting begins. Beans inability to continue the rally like corn is not surprising but the corn-bean price ratio that we are seeing is going to make for some interesting conversations when planting is decided.

Via Barchart

Equity Markets

The equity markets have been volatile as we start the year with the Magnificent 7 taking a break while managers repositioning for expected moves (or lack thereof) from the Fed. With the constant talk of tariffs and then delays to implementation, it provides a volatile market within different sectors.

Via Barchart

Other News

  • Wheat has moved higher recently with record cold weather and winterkill concern driving it to a technical breakout.
  • Livestock prices have pulled back this month but are still at strong prices as the head count in the US remains on the small side.
  • Tariff announcements remain at the top of mind of the markets as uncertainty is the main issue with no clear guidance and kicking the can down the road.

Drought Monitor

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

 

10 Feb 2025

LEONARD LUMBER REPORT: The dynamic of supply and demand guides most commodities markets

The Lumber Market:

The dynamic of supply and demand guides most commodities markets. Admittedly some do have a slight amount of emotion added to the trade. Not here. Lumber is different. Most of the trade is based on opinions, emotions, and rumors. Supply and demand factors are secondary. We all know it as a fact and have learned to trade the whole package. This last go-around in futures was a perfect example of the smooth-out cycle that many economists embrace. The thought is pricing smooths out over time. Not in a few hours. While I agree with the theory, I have never enjoyed it in lumber. You are never hedged in this market, and that lack of hedging allows for wide swings. Wide swings kill margins, and reduced margins bring in more caution. Today, everyone wishes for higher prices to bolster the bottom line. A $600 2×4 looks much better on the books than a $400 one. We are seeing a market in the greatest smoothing out period in its history after a run to $1700. It takes time and pain. What a western Canadian producer is at has little to do with the market. Times have changed.

We continue to seek a tighter supply environment to raise prices. This is year three of that strategy. At this pace, the mills could continue to hover around break-even indefinitely. How do we survive in this environment? With SYP and Euro not embracing the cutback strategy, the pool of wood is always available. They always look to sell their wood, which is negative. This leaves the battle between SPF and the marketplace.

There are always chances for a commodity to see sharply higher prices when not warranted. Today, lumber is one. At no time should emotions warrant higher prices when a market doesn’t have the dynamics, but they do.

The trend will be down in the next couple of months as housing stays flat, but prices will spike up and back. The market gives up $30 to $50. Don’t look to add more to it. Trade what it gives you.

Now for today:

 The futures market has recovered 50% of this move. 596.30 is 50%, and 61% is 605. Without the algo selling, we could see higher prices, but they will eventually appear. For the next few weeks, the mills will try to dig in. Owning cash today will show a profit.

 

Daily Bulletin:

 

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.
Brian Leonard
312-761-2636
27 Jan 2025

LEONARD LUMBER REPORT: It was a tough week with selling pressure dominating

Recap:

It was a tough week with selling pressure dominating. Who was selling? Most likely an algo that doesn’t grow a position. But I think the bigger question, and one that may linger for a few quarters, is why there isn’t much support on the way down. A quote Friday after existing home sales came out was troubling.

“On an annual basis, existing home sales (4.06 million) declined to the lowest level since 1995, while the median price reached a record high of $407,500 in 2024.” By the way, multifamily construction hit a record last quarter. The industry is very reluctant to participate beyond the contracts that they deal with.

New home sales do better as the existing inventories get sold. Today, with the higher interest rates and record costs, that won’t be happening any time soon. That leaves us in the same atmosphere in 2025 as it was in 2023 and 2024 when the builders created the market. That gives us the duty rally, the tariff rally, and finally, the shutdown/supply rally. At no time does it chase the industry into the marketplace to load up.

If nothing else, the trade is consistent. It made a high and then came back down to value, or at least what the charts call it. We spent a lot of time trading like this at $520. Value is determined by the volume traded in that area. $565 has had a lot. Have we moved our value area from 520 to 560? Too early to tell. The algo type selling strains the market but doesn’t represent it. The industry’s next move will. Just remember, business isn’t dead.

Daily Bulletin:
 
The Commitment of Traders:
About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

[email protected]

312-761-2636