RCM Ag Services

Category: Dow Jones

08 Oct 2020
Agriculture, Corn, Crude Oil, Dow Jones, Market Commentary, Market Updates, Soybeans, Weather, Wheat rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 3 – 9

Corn followed beans higher this week as exports continued and Brazil’s weather is still questionable as their season starts. Corn harvest in the US is 26% complete as favorable weather looks to allow for harvest to continue across the country. As Chinese buying continued following holiday, markets are keeping an eye on their purchases as the Chinese government changed laws in what can be fed to hog herds as they continue to recover from ASF. By not allowing for swill (food waste and garbage) to be fed to hogs anymore the demand for corn and meal for feed looks to increase, but it is hard to tell how much swill feed will need to be replaced. Ethanol demand has remained lower than normal as the pandemic continues, but with lower demand has also lowered production. The lower production has lead to tightening in stocks to their lowest level in 8 years. If/when ethanol demand rebounds, look for a boost in corn purchases for ethanol use to replenish stocks and meet demand. Keep an eye on the USDA yield estimates on Friday.


Via Barchart

 


Soybeans kept the rally going this week on weather concerns in South America and exports continued in large amounts. South America remains in a dry pattern that could turn into a drought if they do not get the much needed and forecasted rain in the next couple of weeks to get the beans in the field in some major growing areas. Harvest continued across the US this week as harvest is seen 36% complete as favorable weather across much of the US has allowed farmers to get off to a great start. As China came back from holiday the buying continued as feed demand in China has started to pick up despite herd sizes only being about 65% of what they were before ASF. Fund buying has also continued this week as funds now are long 1.4 billion bushels (about 10% of the expected world production in 20/21) of beans. Prices will once again be paying attention to the USDA report on Friday but do not expect anything like the last report. As you go through harvest we suggest not storing any beans as the market is currently inverted (Nov prices being better than anything in ’21) showing the market wants your beans now. Not seeing a carry in the market makes it hard to hold the beans when selling the physical and getting long futures if you believe the markets are going higher is an option.

 

Via Barchart

 


Funds continued to get long wheat this week, with some profit taking on Thursday, helping fuel the rally that other grains have seen. Weather problems in other areas of the world are helping markets move as parts of Russia remain dry and the Black Sea area has been dry but is forecasted to get much needed rain this week. Argentina like Brazil has been dry but looks to continue their dry pattern unlike Brazil. Stocks are expected to be lower in the report on Friday from the September report.


Via Barchart

 


Cotton prices rallied this week as Hurricane Delta heads toward the Mississippi Delta. The fact that there is still plenty of time for another storm before harvest after Delta worries farmers that one storm may be fine but another would present major issues. Cotton has seen a steady rise in prices since the lows back in April. Exports were good this week as there were little cancellations and strong sales to Vietnam.


Via Barchart

 

Crude Oil
Crude saw a boost this week as Hurricane Delta has shut down production in many parts of the Gulf of Mexico. This is typical of prices whenever a hurricane is in the gulf as reactions to what may happen is usually worse than the outcome.

Dow Jones
The Dow continues its bounce back despite back and forth tweets from Trump and Pelosi regarding a new relief bill and what it should look like. Big tech stays in the news as Amazon and Facebook are continuously being looked at for anti-trust violations by a bipartisan group, not much is expected to come from this but worth noting.

World Weather
Brazil has been dry causing some delays in planting but some rain this week and cooler temperatures are in the forecast so markets will keep an eye on any changes there. Hurricane Delta barrels toward the US as farmers in the south look to try and get their crops out ahead of any rain that could cause damage, especially to cotton in the Delta.

 

Via Barchart.com

02 Oct 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, Weather rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 26 – OCTOBER 2

Corn saw a big boost as a result of the surprises in the USDA stocks report this week. Corn came in 255 million bushels below estimates at 1.995 MBU, which comes back to what everyone thought that the USDA overestimated the 2019 crop. This adjustment lowers the 2019 yield by about 3 BPA, which sounds much more accurate from what we heard from talking to farmers. Ultimately, this means world stocks are tightening as Chinese demand of US grains has picked up with Phase 1 trucking on. Post-report funds continued to get long, which helped the drive up as well. Exports continue at a great pace as harvest begins in many parts of the US. Continue to keep an eye on exports and weather as any major delays to harvest/crop moisture could prevent problems although the forecast is favorable into mid-October. The chart below shows the sharp bounce back up after a couple weeks of slow losses.

Via Barchart

Soybeans had the biggest surprise of the report as ending stocks were down 42% from the September 2019 report. Beans came in at 523 million bushels, over 50 million below the average estimates. This low number on top of continued large buying from China saw a 25-cent rally after the report. Like corn, funds continued to get long post-report and are now long 1.07 billion bushels. As export numbers continue to be large and the USDA updated the stocks down, both were very bullish. Brazil’s growing season has gotten off to a good start as some areas are starting to look for rain. A good rain in Brazil would put a damper on the bulls, but with funds so long they will look to exports and harvest.


Via Barchart

 

Dow Jones

The Dow bounced back this week despite a Presidential debate that left more questions than answers. Tech continued its bounce back after it took a tumble a few weeks ago as airlines and travel industry saw a boost as more potential aid could be heading there way along with a second stimulus package is in discussion. The unemployment report on Friday will be the main market mover. But with President Trump testing positive for Covid-19 more uncertainty and volatility will be added to the markets. Any updates on his condition with it will be watched closely as we will not see any campaigning from him over the next couple of weeks.

 

World Weather
Brazil and Argentina are off to a pretty normal start as planting went well. Central Brazil will see higher than normal temperatures accompanied by average to below average precipitation. Dry and warm outlook for central Brazil to start October and Argentina has a slightly dry outlook with normal temperatures.

18 Sep 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, Weather rcmagserv 0 comment

Ag Market Update: September 12 – 18

Corn gained on the week following soybeans lead. Corn exports, like soybeans, have been strong with China being a large buyer recently. As some analysts have pointed out, this pace of Chinese purchases may be a signal that their supplies are much lower than they have reported. As most numbers that come out of China, one should be skeptical, so this may be showing us where they actually stand. With weather looking good heading into harvest, the next few weeks should allow for steady progress. As you can see from the chart below, prices are at the highest they have been since March heading into harvest following the upward trend in beans; you may want to begin looking at putting a floor in. If corn exports continue (136% ahead of where they were this time last year), we may still see an  upward trend, but keep an eye on demand as harvest begins.

 

Soybeans saw huge gains this week to get and stay over $10.00 for the first time in the last 2 years. The continued buying from China, 6+ MBU seemingly every day, has led this charge up as we continue to see large export numbers. Funds have also been buyers along the run and are nearing 1 BBU in net long positions, the largest long position since 2012 when we had a devastating drought. If China keeps up with the purchases it is definitely supportive for prices. Soybean exports are 189% ahead of where they were this time last year. If soybean sales keep up this pace there does not seem much to get in the way of prices as South America is running low on last year’s crop as they begin planting for this year. The chart below shows the recent surge reaching contract highs as we head into harvest.

 

Dow Jones
The Dow gained on the week after several up and down trading days as tech stocks continue to struggle after the large selloff last week. It seems to have weathered the storm and may continue its slow recovery as many major areas of the US stay in some form of lockdown.

World Weather
Dry and warm weather remains heading forward as harvest beings in the US. South America is unusually dry as planting season starts and Russian wheat areas need rain. A large spread soaking rain in SA may dip prices a bit, but if SA drought continues after planting that would be bullish for beans.

11 Sep 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Market Update: September 5 – 11

Corn gains on the week have been driven from continued strong export numbers as well as trade expectations of a 178 yield estimate heading into the USDA report on Friday. The report came out with a 178.5 bu/acre estimate which is pretty in line with what the trade was expecting. The drop from the 181.8 bu/acre yield estimate from the previous USDA report comes from a combination of the storm damage in Iowa as well as the extended stretch of dryness across many states to end last month. This impressive run up by corn from the lows seen in early August has been welcome heading into harvest. With a 2.5 billion bushel carryover still estimated we may see a tightening of prices as corn leaves the fields and we get a better idea on final yield as well as demand. The bump up in expected corn exports is good to see as the USDA expects countries (China) to continue their buying. Below you can see the Supply and Demand chart for corn from the report.

Via USDA

 

Soybeans have seen strong gains like corn in the last month. The report came through with numbers close to expectations with little surprises. Exports continue at a good pace and China announced that they intend to rebuild government stocks. A month ago $10 soybeans did not seem to be in play but now it is within a few cents. As we get closer to harvest the weather’s effect on the crop will be diminished outside of an early freeze that could cause damage. Keep an eye on exports to keep their pace and any bullish weather news as that magic $10 number looks to be met. See the Soybean Supply and Demand chart from Friday’s report below.

Via USDA

 

Dow Jones
The Dow has continued to bounce up and down finishing down on the week as tech continues its loses. As the pandemic drags on and business come back or close for good the attention will begin to shift towards the election.

Korea Bans German Pork Imports
South Korea banned German pork imports this week after an African swine Fever case was confirmed in Germany. This move falls in line with guidelines for animal food and safety and is an expected move as South Korea themselves have had trouble with ASF in parts of the country and has been banned from exporting its pork products. Look for some of South Korea’s demand to come to the US market.

USDA: The USDA released their World Agricultural Supply and Demand Estimates today, read the entire report here.

04 Sep 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Other News, Soybeans rcmagserv 0 comment

AG Market Update: August 29 – September 4

Corn saw slight loses on the week after trading in the low $3.60s despite strong export numbers and falling crop conditions. The crop conditions at this point usually fall as corn starts to get ready for harvest and lose its color as ratings come from looking at the fields rather than any testing. As China has continued to be a large buyer it looks like the market has factored in their purchases and will expect similar levels or purchases moving forward. The forecasts have some rain in much needed areas as we get closer to harvest to help hold on to what many expected to be a great crop a month ago but has seen stress as of late. Rain over the weekend is expected for much of the corn belt especially in areas of the WCB that have been the driest. Although the rain may be late to help out corn much it should give the beans in those areas help. Look for the trade to hold its breath and trade in the $3.50-$3.60 range as everyone holds their breath in anticipation of the USDA Report next Friday.

Soybeans continue its climb higher as exports continue to be huge. Despite a bearish change in the weather with widespread rain coming this weekend the demand continues to pull beans higher. The rain could be coming at just the right time in certain areas as yields can still be effected. One private yield estimate from StoneX pegged the US bean yield at 52.9 bushels. This would be a larger trend line yield but with the increased demand from China it would not crush prices moving forward. Keep an eye on other private estimates as we head into the USDA Report next Friday to hopefully get an idea what the USDA might come out with. Look for exports to continue their strong run as any pullback would hurt prices that have been drawing their strength from recently.

DOW Jones

After trading over 29,000 the Dow saw large losses on Thursday after a week of gains. After the large run-up the last few months the losses could be from profit taking or the start of a market correction but there is no way to tell after one day.

Vaccine News

The US Center for Disease Control announced that states should prepare for a potential vaccine on November 1st. This would be great news heading into the end of 2020 and also right before the election.

31 Jul 2020
Agriculture, Corn, Cotton, Dow Jones, Market Commentary, Market Updates, Other News, Soybeans rcmagserv 0 comment

Ag Markets Update: July 25 – 31

As weather across the country continues to be supportive for the crops corn prices have dropped. The past few weeks of timely rain and cooler temperatures has put a trend line or record national yield very much in view. From talking to farmers across the country many think this has potential to be one of their best crops and as great as that is everyone knows the larger the yields the lower the prices tend to be. With China well behind on their phase 1 trade agreement purchases, corn will need to get support elsewhere unless China decides to ramp up their purchases in the second half of 2020. Keep an eye on the flooding in China as they have lost over a million acres of farmland and will tighten their supplies. The higher crop conditions this week did not help prices either as they came as a surprise.

Soybeans and corn are in a similar situation where large yields are very much in play due to the weather of the past month and what looks to be coming. Soybean exports continue along at a good pace but nowhere near the Phase 1 agreement numbers that were expected. If China can ramp up their purchases in the coming months beans can get a boost that is unlikely to come without a weather problem. The good export news of late has been offset by good weather and higher expected yields which is frustrating seeing bullish news be uneventful for prices.

After a short term pull back from the near term highs markets bounced off a technical low and appear poised to give the highs another run.  Weather watchers will be tracking hurricane Isaias and it’s potential impact to the delta over the weekend.  In many cases the fear of hurricanes has been bigger than the actual punch.  In reality, following the storm days in advance does little good and is often a story of buy the rumor and sell the fact.  Look for prices to test the 65 cent level and be prepared to increase hedge protection above 63.50.

 

DOW Jones

The Dow continues its slight downtrend this week as Covid-19 cases remain high in many parts of the country. Despite good vaccine news coming out this week as several promising candidates move onto the next phase of trials, the Dow fell again. All eyes were on Capital Hill this week as Google, Facebook, Amazon and Apple’s CEOs were questioned by politicians looking at anti-trust issues. These were not huge market movers but something to keep an eye on as these companies have helped lead the charge up from the lows back in March along with other big tech companies.

Via Barchart.com

17 Jul 2020
Agriculture, Corn, Dow Jones, Other News, Soybeans, Wheat rcmagserv 0 comment

Ag Markets Update: July 11 – 17

Despite one of the largest single export sales to China ever, prices for the week fell. After some welcome rains in the past week in areas that were dry, favorable outlook during pollination has the potential to help make this crop large. Ultimately, as yield potential continues to look high, big bumps in corn are looking slim unless there is a surprise in forecast changes or export sales. The crop conditions continue to look strong as you can see in the chart below. We are not near/at record conditions, but still have very strong numbers at this point in the year. A dip in condition would factor into price movement as well, but don’t don’t plan on that for a big boost towards the end of the month.


Soybeans had a flat week price-wise as steady sales continued to China and forecasts didn’t change too drastically. We started out the week with some prices drops, but a solid midweek bounce helped get back to flat as we head into the weekend. Look for any big forecast changes or unexpected purchases to be the only thing to move bean prices in the near future. As world demand has seen an uptick, the U.S. may find more buyers as South America has been so busy selling up to this point, they may have trouble fulfilling any additional large exports.

 

Large purchases from China gave Wheat a big boost halfway into the week. Wheat did have to give a good chunk of that boost back the following day due to a lack of confirmation on purchases, but any Chinese purchases at this point are beneficial to the markets as other Wheat growing countries are seeing lower yield numbers. As you can see below, markets are well off the lows that we set a few weeks back as Wheat has made a solid rebound. Just like with Soybeans, more confirmed purchases, or any purchases for that matter, would be beneficial to U.S. Wheat.

 

Dow Jones
The Dow saw positive numbers overall for the week with a few days of solid gains and small losses. Americans continue to keep their eyes on places that are reopening and spikes in major metropolitan areas. Retail spending was up +7.5% last month, but some experts think we may see that shrink as some states have rolled back their opening phases where cases have spiked. President Trump wants schools to open this fall as he sees that as a way to get more people back to work, so the rolling out of back-to-school plans be an important factor on the economy heading into election times.

10 Jul 2020
Agriculture, Corn, Dow Jones, Lumber, Market Updates, Soybeans, Wheat rcmagserv 0 comment

Ag Markets Update: July 4 – 10


Corn had a choppy week only to end $0.09 lower after last week’s shockingly bullish USDA report. The main price mover this week was the uncertainty in the weather outlook. The weather post July 15th has been in limbo of hot and dry or cooler with some rain. Hot and dry would hurt the crop for the long run lowering yield, which is when we saw the prices rise on certain days. The post July 15th to August 1st period is very important to keep an eye on moving forward as the weather will be the key mover and the August 10th USDA report is worth keeping an eye on. The eastern corn belt looks to have extreme heat and dryness over the next week after a round of rain earlier this week…but let’s be honest, the weather man is only right 10% of the time = changes to the forecast are expected and prices will react.

“Supply side for corn ad beans adjusted due to the changes in planted area, so nothing too exciting there. But corn demand got cut quite a bit. Even so, the ending stocks are below trade expectations,” Scoville says (agriculture.com)

 


Soybeans had a similar week to corn with some up and down price movement after the rally last week. The hotter and drier outlook in parts of the Midwest will have an adverse effect on the crop like it will for corn. The lack of sales to China is are still holding back the market as Phase 1 continues to trail behind trade goals. Like corn, keep an eye on weather moving forward but as mentioned before. And big purchases from China would be a promising sign, but it doesn’t seem like that’s bound to happen any time soon:

Meanwhile, trade relations between the U.S. and China remain relatively frosty. President Donald Trump noted earlier today that relations are “severely damaged” after each has accused the other of mishandling the coronavirus pandemic. Trump indicated a planned phase-two trade agreement is still on the table but is not a priority right now. (farmprogress.com)

 


Wheat got a boost this week (+$0.42) as Russia and Europe’s wheat crops look to come in well below pre-harvest estimates. Low harvest numbers from the rest of the world is bullish for U.S. wheat prices as our growing season continues. This boost is very welcome following the last few months of declining prices. The markets will keep an eye on Russia and Europe as they progress through harvest.

 

Via Barchart


Dow Jones
The Dow continues to move on any news related to COVID-19. A lot of uncertainty hangs over the U.S. and the markets as spikes in cases continues around the country. An important thing to keep an eye on for the markets will be what schools decide to do in the fall, as going back to school is being used as a tool to also try and continue to reopen the economy.

Lumber
September lumber futures reached a multi-year high this week and are now up +82% from their April multi-year low. The best way to sum up the market place is by watching it print. It was up $48 – $498 since Wednesday. There isn’t enough wood to supply the needs, and mills are raising prices at will. It is a market squeeze that only ends once the pipeline is filling or prices shut down purchase order books.

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