Category: Agriculture

09 Apr 2021

AG MARKET UPDATES: APRIL 3 – 9


The grains have started to separate themselves from each other as they begin to have their own trades tied to the US growing season coming into view. After last week’s plantings intention report, corn had a couple down days but has climbed back to the post report level heading into Friday’s USDA April report. Corn’s exports this week were better than expected along with news that China may buy up to 80 million bushels into late summer (bullish news for old crop corn). Basis is showing us that supplies are tightening despite the lagging data from the USDA stocks report.   Even if Friday’s report does not show this expected change, will the market believe the USDA or the cash market? Brazil’s safrinha crop is under stress as it continues to be dry with no immediate relief which is expected to cause even more damage to a crop that has had its issues coming down the home stretch. Brazil’s corn production according to this week’s CONAB report is still expected to be a record 4.29 billion bushels despite the stress. The US forecast is dry in many areas as early planting looks to be available across multiple regions.

Via Barchart

 


Soybeans had a tough week following last week’s rally post acreage announcement. World vegetable oil prices have been falling and have pulled beans down with it. The markets are trying to figure out how to price beans.  ASF in China is still a problem while world demand continues to rise outside of hog feed. US consumer demand coming out of Covid-19 lockdowns has been supportive to bean prices, despite the reopening issues in other parts of the world. Looking at new crop beans, they continue the slow climb higher, as the US crop is expected to play a major role in meeting the post lockdown demand towards the end of 2021. The USDA report on Friday will show the updated stocks and, like corn, soybean demand should be higher than the last report based off continued exports since the last report.

Via Barchart

 

Dow Jones
The Dow gained on the week as interest rate anxiety is calming down and funds reposition themselves away from tech and into more cyclical sectors following tech’s run to end 2020. The Biden administration announced their plan for a $2+ trillion-dollar infrastructure plan this week that covers many different areas. Investors will keep their eye on the implementation of the plan and what sectors will be the best benefactors.

Basis
Cash basis levels in many areas continue to move higher even on days when futures prices rally. The cash market is reminding us that demand is still strong and many farmers have sold most of their old crop, so finding corn and beans is not as easy since farmers have sold with the rally of the last several months.

Weekly Prices

Via Barchart.com

 

 

19 Mar 2021

Ag Market Updates: March 13 – 19


Corn had a good week overall, despite the struggle of Thursday’s trade, largely supported by another strong week of exports. Improved chances of rain in Argentina and rains in the US adding to early spring soil conditions kept the bulls from running away to the upside. The markets also continue to have ASF in China hanging over them, but the less we hear about that the better as “no news, is good news.” Ethanol production hit a 12-week high in this week’s report while stocks fell for the 5th straight week. With more people driving and good blend margins for producers the Ethanol machine (i.e corn buying) should continue.  As you can see in the chart below we have been trading in the same range since the February USDA report bookended the near term high AND low. The Acreage Intentions report at the end of the month will be very important and likely the next major marketing moving event.

Via Barchart

 


Soybeans struggled this week as much needed rain came in parts of the country as we approach planting season in the US. South America’s harvest has begun to pick up after it struggled the first few weeks. The increased harvest pace has helped replenish the world export pipeline. World demand continues to be strong, and the US will need to have a solid new crop production to be able to meet both the current and post COVID world demand heading into 2022. Looking ahead to the end of the month, both China and South American weather will continue to be the important movers leading up to the acreage report on March 31st. The chart below shows soybeans in a narrow near term technical range. Continued buying from both end users and the funds will be needed to keep the technical outlook from getting dicey, especially for new crop.



Via Barchart


Dow Jones
The Dow had a strong week as vaccines continue to rollout in large amounts across the US. We are now well ahead of the 100 million vaccines in the first 100 days of the Biden administration. All eyes were on the FED earlier this week when they held interest rates at historic lows and indicated that no change in policy is likely until 2023. Combining low cost money and the $1.9 Trillion Covid Relief bill traders had no reason not to buy equities.

Energies
Energies took it on the chin this week as there were loses across the board in both energy stocks and energy commodities. Energies have had an incredible start the year, where a pullback wasn’t all that surprising.  There is a question if OPEC will increase output to take advantage.  Long term, as long as production doesn’t change drastically and vaccines continue to roll out experts are forecasting rising demand for energy across the board.

Weekly Prices

Via Barchart.com

05 Mar 2021

Ag Market Updates: February 27 – March 5

Corn had noticeable losses this week after volatility in the markets picked back up. A disappointing, but not surprising, export report helped to keep pressure on markets. Thursday was off to a good start until about midday when the selling began to finish, well off the highs for a mixed close. Rain has crept into the northern Argentina forecast which will help a hurting corn crop. The continued wetness of northern Brazil keeps the regions harvest behind with no clear window for them to catch up/make serious progress. The May contract closed below the 20 day moving average at the close of Thursday’s trading. There has been support below these levels the last few times markets tested this level.  How Friday’s trade finishes will be important to maintain the technical uptrend.

The March USDA Report be out on Tuesday the March 9th and will be the next big market mover.  Traders are in need of some bullish news to hold off the bears.  Consider covering a portion of your new crop with some downside protection and or forward sales ahead of the report.

Via Barchart.com

 

Soybeans made small gains on the week as the continued struggles with the Brazilian harvest has continued to be supportive for the past/many months. The problem hanging over the market right now is the confirmation of ASF in China AGAIN (will it ever end?). After all the talk of China’s improved process of feeding pigs = driving soybean exports, if ASF gets out of hand (i.e 2018) it could pull the rug out from under the demand story. Despite this news, soybean oil prices continue to climb supporting beans and slowing the blow from the ASF scare. Exports, like corn, were not great but that was expected as sales remain strong and well ahead of this time last year. The weather issues in South America will continue to support US beans as they struggle to finish harvest and will push back any double crop area planting. Another note about the quality of the South American crop- the Buenos Ares Grains Exchange rated the Argentinian crop 10% good to excellent down from 15% the previous week. South America’s troubles are the US bean prices gains.


Via Barchart.com

 

Dow Jones
The Dow had a tough week along with the other major indexes as the prospects of interest rate pressure threw cold water on stock prices.  The 10 year US Treasury Note closed Thursday over 1.5% for the first time since the pandemic began. This has brought caution to the markets as tech has gotten hammered and the Fed may be losing its grip on its direction for interest rates.

Insurance
February was important for revenue-based insurance averages. At the end of the month the price for corn is $4.5848 and soybeans are $11.8665.

Weekly Prices

Via Barchart.com

19 Feb 2021

AG MARKET UPDATES: FEBRUARY 13 – 19

It’s been a slow week for Corn gains as China is celebrating the lunar new year. With the lack of Chinese buying the markets turned elsewhere for news. South America’s weather is still pretty consistent with wet conditions in northern Brazil and southern Brazil and Argentina remaining pretty dry. The next few weeks will be very important for Brazil/Argentina as soybean harvest is already behind pace. The Ag Forum has released the USDA expected planted acreage; Corn was pegged at 92 million acres, which was around most estimates, and not much of a surprise to the markets.

 

Friday’s supply and demand report is going to be the most important piece of news this week as it will be a reminder how tight the world and US supply are. The report, South American weather, and China being back from holiday will be where the focus shifts.

 


Via Barchart.com

 

Like corn, Soybeans gained this week, despite a slow news cycle. Harvest delays continue in South America, to put it in perspective, the harvest is just reaching the halfway point of where they typically are at this point. The January crush report had another record month with bean crush coming in at 184.6 million bushels. The US will runout of beans this summer if this crush rate continues, and after 5 record weeks in a row it does not seem to be slowing down. The Ag Forum came out with an estimated 90 million acres of soybeans for this year which was right around estimates as well.

 

It will be important to keep watching exports as China comes back from their holiday and will begin normal activity again. The news to end the week will be the supply and demand report so how China responds next week will give us an idea how accurate we think the report is.


Via Barchart.com

 

It’s been a strong week for Wheat as it bounced up from the lower end of the range it has been trading in. The cold weather throughout much of the country may have sparked the move this week as the possibility of damage to the crop comes in to play. It will be challenging to get a read on the extent of the damage until the spring making it more of a waiting game instead of a knee jerk reaction. Winterkill rallies are usually short-lived so we will see with this one. The USDA is estimating 45 million acres of wheat this year which is up by less than 1 million from last year. Even though we had a rally this week wheat appears to still be range bound as it has been.


Via Barchart.com

 

Dow Jones
The Dow has had an up and down week as market news has been quiet but the focus of the historic cold in parts of the country has caused energies to surge. The winter storm that ripped through the country has caused issues travelling in many areas slowing down the Covid-19 vaccine distribution and slowing down getting shots in arms as well. Cases have been on the decline the last few weeks and it will be important for this trend to continue.

Insurance
This month is important for revenue-based insurance averages so it will be important to keep an eye on the markets even if you do not plan on making any sales. As of the close on 2/18 the price for corn is $4.5304 and soybeans are $11.711.

Weekly Prices

Via Barchart.com