RCM Ag Services

Category: Grain

12 Oct 2021
Agriculture, Corn, Grain, Market Commentary, Market Updates, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 30 – OCTOBER 12 USDA REPORT

Corn had been in neutral heading into the October 12th USDA yield report, seeing bearish numbers. The report raised yield to 176.5 bushels per acre, slightly higher than the report last month. U.S. ending stocks and world stocks were both raised while also raising exports, lowering feed and residual use. The somewhat disappointing yields in the eastern corn belt were offset by better-than-expected western corn belt/plains yields. Demand looked to be lowered due to the continued export issues out of New Orleans since the hurricane, and a record crop in China won’t require them to import as much. The season-average corn price received by producers was left unchanged at $5.45. A higher yield and supply is bearish news, but the numbers do not appear to have been bearish enough to where we will retest harvest lows anytime soon. The cash market will continue to give us an idea of how much corn is actually out there, along with private estimates as harvest rolls on.

Via Barchart                        Soybeans have  been struggling the last couple of months, and the previous two reports have not done them any favors. As you can see in the chart below, it has been tough sledding since early June for beans. The USDA raised yields to 51.5 bushels per acre, up from the September report. The feeling that the U.S. bean crop was getting bigger with the good late-season weather came to fruition in the report. World stocks were also revised higher, creating another bearish concern. Without demand from China or a problem in South America, there aren’t many bullish factors for beans. If either China demand or SA weather turn in favor of the U.S., we could see some support, but until then, there is not much helping the market.

Via Barchart

USDA Report

The report covers many areas of the agriculture landscape. If you would like to view the full report or look at something else not covered, here is the link.

Dow Jones

The Dow bounced back this week following the rough end of September. Congress agreed to pass a short-term agreement to keep the government funded until December. There was a small amount of worry in the markets as the deadline loomed, but the same concern will return in 2 months when they need to pass a long-term plan and a debt limit adjustment. Any bounce back after a significant drop is good to see to level everyone’s heads.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence, along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of agriculture markets. They discuss the real-world application of short-dated options to fight the recent blaze of volatility surrounding agriculture markets potentially.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the U.S. drought monitor and the comparison to it from a week ago. The outlined areas in black are areas that the drought will have a dominant impact.

Via Barchart.com

01 Oct 2021
Agriculture, Corn, Cotton, Grain, Market Commentary, Market Updates, Podcast, Research, Soybeans, USDA Report, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 23 – 30

Corn took it on the chin upon the release of Thursday’s USDA report before bouncing back to finish only slightly lower on the day, but still up on the week. The report may have left more questions than answers hanging around as they raised ending stocks, but as we mentioned last week, the current basis and cash markets hint there may be less corn out there than the USDA believes. Corn stocks came in at 1.236 billion bushels, which was higher than the average estimate going in. Harvest was 18% done at the start of the week, and further progress will have been made with favorable harvest conditions. Exports this week were not great for corn, while beans were strong. The next major report for corn will be the October 12th yield update. With harvest getting off to a fast start, it will be interesting to see if the private estimates and USDA are closer to each other than usual this far in.

Via Barchart                         

Soybeans fell post report as estimates were well lower than the USDA number of 256 million bushels. The average estimate was 174 million bushels which caused the immediate and lasting drop following the report. Obviously, nobody saw this number coming as it was well higher than the highest estimates. It is now time for the market to decide if they believe that number leading up to the October 12th yield report. Beans had great exports this week, but that was not enough to fend off the bears with the report. All the losses for beans on the week came from the report, as it had been pretty flat until Thursday. Soybeans harvested at 16% and will continue like corn this week. Like corn, the October 12th yield update will be critical as harvest has progressed further and we have a better idea of the crop.

Via Barchart

Cotton has been on a great run the last two weeks as you can see in the chart below. Cotton busted through several technical indicators in the 97 cent range while also clearing the 99.47 high from January of 2012. China has started to inquire about purchasing cotton as many companies look to import cotton and no longer use cotton from Xinjiang. Ultimately this is a supply/demand driven rally from strong global demand and uncertainty about the crop until it is out of the ground. Forecasts for rains in West Texas this weekend are not helpful for the crop and could cause issues depending on how much it does rain. Even with further upside potential to the cotton price this is a good opportunity to set floors to take advantage of this run up. As always look at your production and make the informed decision that applies specifically to your operation and not a cookie cutter plan.

Note: Since the writing above, Cotton has now topped 105 with December 2021 Cotton touching 107.28 on what seems to be a made rush of continued buying…. hold on to your hats!

Via Barchart

Wheat

Wheat saw a post-report rally as all wheat stocks came in at 1.780 billion bushels, which was below the pre-report estimates. Keep an eye on Russia as the export tax on Russian wheat will cut acres from their regular planting and could play out in the US wheat market as well.

Dow Jones

The Dow struggled again this week as September proved to be the worst month for stocks since March 2020, when Covid hit. Rising treasuries and interest rate hikes in the future had some to do with it, but September historically is not a great month for performance. One bad month in the span of a year and a half should not ring the alarm, but it will remind everyone that stocks can go down.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence, along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of agriculture markets. They discuss the real-world application of short-dated options to potentially fight the recent blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the US drought monitor and the comparison to it from a week ago. The outlined areas in black are areas that the drought will have a dominant impact.

Via Barchart.com

 

 

28 Sep 2021
Agriculture, Cash Basis, Grain, Other News, Podcast, Risk Management rcmagserv 0 comment

Ag View Solutions – Here’s what you need to know about the Outlook for the first week of October

Jody Lawrence, RCM Ag Services’ head of research, joined Shay Foulk on his podcast “The Ag View Pitch” for this week’s market outlook. Jody hits on some major points, including harvest, basis, the upcoming USDA stocks report, and storage decisions that need to be made.

Jody makes the point of discussing what the cash market has been telling us vs. what the futures market and USDA are. Basis has been historically strong while the USDA has not had drastically tight balance sheets showing us some disconnect. Should we expect this week’s report to lower ending stocks as the cash market would hint at?

A harvest update from what Jody and Shay are hearing from their people, both agree that there were many unknown/under-reported issues early in the year that we may be seeing played out combined with the dry and hot finish.

The basis discussion starts with ethanol and how the plants are affecting many different commodities. Currently, margins for ethanol allow them to have a better basis, which forces elevators to do the same to remain competitive.

Should you store soybeans or corn this year? Jody and Shay dive into the margins and spread in the futures markets and basic considerations. No matter what you decide, allowing yourself the opportunity to still participate in the market via futures and options will allow you to not miss out on upside possibilities.

Jody has some final thoughts on the oats market that he leaves us with and what it could mean for the corn and grain markets in countries with major oats markets.

24 Sep 2021
Agriculture, Corn, Grain, Market Commentary, Market Updates, Podcast, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 16 – 23

Corn was pretty even on the week, only losing 1 cent as overall market weakness to start the week pulled it lower, followed by a rebound the last few days. Harvest continues to roll on as there has been great weather the last week in most parts of the country. Inconsistent yield reports coming out of the eastern corn belt have raised an eyebrow, but with a long way to go before the end of harvest, it is not a market mover. As always, when harvest comes, we will begin to get an idea of how many bushels are going straight to market and how much will go into storage. The late rally in 2020 and into this year may have some farmers trigger shy along with a La Nina year in South America. The exports were steady but nothing major to move the markets one way or another. Look for the shipping/export problems to continue until all the issues caused by Hurricane Ida are fixed. The next USDA report on the 30th will be what the market and traders position themselves for over the next week.

Via Barchart                        Soybeans have had a similar bounce back after the start of the week but still fell slightly. Exports have been strong recently as China continues to be a buyer as US beans have become competitive in the world market. Harvest for beans has gotten going as well and will continue in the coming weeks. Dozens of crush plants in China have been forced to close while the government looks to reduce electricity use to meet energy-saving goals. There has been a lot of confusion around the biofuel mandates but, until we get a final answer from the Biden administration, the market does not seem to be interested in rumors.

Via Barchart

Dow Jones

The Dow has gotten its losses back following the Evergrande driven collapse to start the week. The quick bounce back after the worst day in several months is good to see for the bulls, while the bears do not think that is the only issue in the market and a correction is still due. Despite the bounce back, the Evergrande news will be followed for a while.The Fed did not make any major changes this week but may be looking to towards the end of the year.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence, along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of agriculture markets. They discuss the real-world application of short-dated options to potentially fight the recent blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the US drought monitor and the comparison to it from a week ago. The outlined areas in black are areas that the drought will have a dominant impact.

Via Barchart.com

 

 

 

17 Sep 2021
Agriculture, Corn, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 2 – 16

Corn was struggling heading into the USDA report last week but has seen a good 30+ cent bounce from the sub $5.00 lows. The USDA raised their expected yield for corn to 176.3 bu/acre and added 600,000 acres. They also raised the ending stocks with higher yield for what some would consider a bearish report, but the reaction was neutral to bullish following it. As harvest gets going, yield estimates cover a wide range, but it appears that a mid 170s is more and more likely. With no significant weather concerns in the coming weeks, harvest should get off to a fast start. As strong as prices currently are, it is always essential to have a marketing strategy to avoid missing out on other opportunities. As you debate how much to store in the bins or go ahead and sell, make sure it is what makes the most sense for your farm. If you want to sell now to get the cash, consider what can be done on paper to not miss out in case of higher prices in the future. As harvest gets rolling expect yield updates to change as well while the markets keep an eye on them.

Via Barchart

Soybeans have had a similar reaction the past couple of weeks as corn. The USDA slightly raised their bean yield to 50.6 bu/acre from 50 and lowered harvested acres by 300,000. China continues to show up in the export report which is both needed and welcome to see after this summer’s lack.. As the ports in New Orleans and the other grain terminals along the Mississippi River reopen following the hurricane, export disruption worry has slowed. Harvest (like corn) should get off to a great start in the coming weeks, and it is crucial to have your marketing plan ready and execute it. Keep an eye on yield reports as they come out in the weeks ahead and the cash market as it will help give an idea of how much people are willing to sell now or store.

Via Barchart

Dow Jones

The Dow has struggled so far in September like the other indexes. This is not uncommon to see this time of the year but does give investors heartburn when you see back-to-back weeks of struggles.

Wheat

The insurance price was set for the red wheat varieties yesterday at $7.16 and $7.08, a multi-year high.  High prices cure high prices so expect corn to lose acres in the Wheat Belt as the guarantees will motivate additional wheat acres.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence, along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of agriculture markets. They discuss the real-world application of short-dated options to fight the recent blaze of volatility surrounding agriculture markets potentially. https://rcmagservices.com/the-hedged-edge/

 

US Drought Monitor

The maps below show the US drought monitor and the comparison to it from a week ago. The dryness will allow harvest to start on time.

 

Via Barchart.com

 

 

03 Sep 2021
Corn, Grain, Market Commentary, Market Updates, Podcast, Risk Management, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUGUST 26 – SEPTEMBER 2

Corn was hit hard this week as we continue to experience the fallout from Ida hitting the export business along with a favorable weather forecast ahead. Exports were better than expected this week coming in at 43 million bushels, which was the highest export total for corn since mid-May. The fallout from Ida will, more than likely, be seen playing out in the cash market.  That said, the longer supply chains are tied up, the bigger effect it will have on the uncertainty of the futures market. As we have mentioned before, South America’s crop is smaller than initially anticipated. With a smaller crop there will be some demand shift to the US corn crop; however, that is yet to show up in the export reports thus far. The big question is if/when that will change and show up in the US export reports. The September 10th USDA report next week will either fuel this bear run of the last month or calm the seas. An interesting note – The September USDA report the last 3 years has had the corn yield below the final yield which will be something to look for if they adjust yield.

Via Barchart

Soybeans have had the same fate as corn the last few weeks as the bears have had the momentum. The issues in New Orleans are playing a major role in this week’s fall just like they did for corn. Brazil is getting some of that business despite a premium being paid just because traders know they can get beans on a ship and send it. The good weather in the weeks ahead could still help the soybean crop despite maybe being a little too late for most corn. As seasonal temperatures set in and no freeze expected any time soon the weather is bearish for prices while good for the crop.

Via Barchart


Dow Jones

The Dow gained on the week as investors continue to feel out the market but not ditching it completely for other options. The rally from last Friday helped pull the market up on the week as the rest of the trading has been muted with no major moving days.

Ida

The port of New Orleans and the other infrastructure in the state of Louisiana and along the Mississippi River will take weeks to address and fix. This will/has caused major problems already for many residents in the areas effected along with the shipping.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

 

US Drought Monitor

The maps below show there was a little change over the week with weekend rains in some areas that needed it and some drying in Indiana.

Via Barchart.com

27 Aug 2021
Agriculture, Corn, Grain, Market Commentary, Market Updates, Podcast, Risk Management, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUGUST 19-26

Corn was unchanged on the week as slow news, a lack of major export announcements, and no major rain events crossed the area’s most in need. Additionally, most of the corn belt has seen above average temperatures this week keeping a bid under the market. The late season heat and hot nights are taking their toll on the crop but hopefully the heat will end soon according to some forecasts. This time of year, markets begin to look at multiple yield reports coming in from various independent groups – i.e the Pro Farmer Tour (results HERE). At first glance many in the industry feel the tour results are a bit high, but only time will tell.  Any big surprise exports or continued weather problems will be the bulls news while rain and yield reports will be the bears.

Via Barchart

Soybeans made small gains on the week as the same news moved beans that moved corn. China continues to be a buyer going on 2 weeks now which is supportive after their long silence. The market is reacting to these purchases as if they were expected and normal purchases. Regular and consistent purchases will need to continue for the market to remain supportive.  Any abrupt could see another slide heading into harvest before we have a better idea on yield. The rains that some think will help corn will also help beans as we head into September.

Via Barchart

Dow Jones

The Dow gained on the week as what seemed to be investor weariness last week turned into buying opportunities. The events in Afghanistan weighed on the market Thursday with uncertainty about the US foreign relations going forward.  As of this morning, Friday 8/27/2021, the S&P and Nasdaq are making fresh all-time highs following the latest comments from the Federal Reserve where NO NEW policy changes were announced and supportive monetary measures will remain in place.

Afghanistan

The suicide bombing by an ISIS-K member Thursday in Kabul, that claimed the lives of dozens of Afghan citizens, along with a dozen US Service members, while injuring countless others, shook the world. The swiftness of the fall of Afghanistan’s army and government to the Taliban has put the US at the center of one of the biggest international situations in recent memory. Going forward the countries around Afghanistan will be important to keep an eye on for exporters to the middle east.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show there was not much change over the week despite weekend rains in some areas that needed it and some drying in Indiana.

Via Barchart.com

20 Aug 2021
Corn, Grain, Market Commentary, Market Updates, Research, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUGUST 12-19

Corn fell on the week tied to better than expected rain totals and uninspiring demand news. Weather over this weekend is expected to provide relief in some areas before normal late summer weather returns to much of the corn belt. Exports were good but lagging this week and as we have seen recently we need consistent and strong buying, not just good. Thursday’s strong downturn was commodity wide as all grains and energies struggled. The western corn belt is expected to get rain this weekend – it needs it – as you can see in the drought monitor below. We are still within the pre-report trading range so how the market trades on Friday and rainfall over the weekend will be the market movers the next couple of trading days.

Via Barchart                          Soybeans, like corn, fell on the week lead by the losses on Thursday. Bean oil and meal also struggled over the last few days as world demand remains in question going forward. The rains expected over this weekend should help the bean crop more so than corn in those areas so the actual rainfall received will be important come Sunday night. Like corn, exports were good but not great and we NEED great to get people excited. If we see China buying new crop beans (or corn) in the coming weeks that would be welcome support for the market that is needing direction. The Biden administration has yet to make up their mind on what they want to do with biofuel mandates presenting the markets with a big question mark that they must work with for now.

Via Barchart

Dow Jones

The Dow lost on the week as markets try to solve the mystery of the Fed and their tapering while also worried about the Delta variant. The consumer demand report and weakness in China consumer demand are hanging over the markets with a possible correction on the way according to some analysts.

US Dollar

The US Dollar hit a 10 month high adding to the bearish reaction across all commodities this week. A weaker USD helps US commodities be more competitive, but we are still a long way from where we were pre-pandemic.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the current drought conditions with rains expected over much of the corn belt over the weekend. Last week’s is also there for comparison week over week.

Via Barchart.com

13 Aug 2021
Corn, Grain, Market Commentary, Market Updates, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUGUST 5 – 12

Corn saw large gains following the USDA report on Thursday before finishing the day well off the highs. The USDA cut expected yield to 174.60 bu/acre from 179.5 in the July report. The USDA also lowered Brazil’s crop yield by 6 million tons to 87 million and some estimates believe it will still be lower than that. The combination of these two yield cuts cut the world ending stocks for the 21/22 year by over 6.5 million tons which shows a slightly lower demand as well.

The report this year cut yield expectations much earlier than in the past which is what surprised the market as we usually get adjustments after the fact. Brazil will probably see another cut in their production down the road where the USDA left the possibility of raising the US production in the future by making such a drastic cut. The drought monitor at the bottom shows current conditions and although it is slightly improved from last week but as you have seen the plains have had a brutal stretch.

Via Barchart                       

Soybeans had more of a mixed report but still gained following the report while finishing well off their highs. The USDA pegged the bean crop at 50 bushel per acre but cut demand by raising world ending stocks. As the demand from China has slowed from the torrid pace to start the year that fueled the run up in price the demand has been quiet recently. With improving weather conditions coming down the stretch the US bean crop is in good shape with the possibility to improve. The world supply is snug but not critically tight so there is more wiggle room for beans than corn currently.

Via Barchart

Dow Jones

The Dow gained on the week as strong earnings continue to come through with the normal names leading the way. The Biden administration’s Infrastructure plan will become more a story as more exact details come out but will provide areas of growth.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the continued drought conditions in the northern Midwest that reaches into the Canadian planes while it has also improved since last week.

 

Via Barchart.com

08 Aug 2021
Corn, Grain, Market Commentary, Market Updates, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: JULY 29 – AUGUST 5

Corn lost over the last 2 weeks, but as you can see below the range has been much tighter than in the last 3 months. Next week’s reports will be the best chance to trade out of this range, whether it is higher or lower is the billion dollar question. Many private firms have come out with estimates recently ranging from the USDA’s number of 179.5 to the mid 170s. Anything lower than 178 would help the price of corn, along with the continued demand rebound and a smaller Brazil crop tightening world supply. CONAB will update the expected yield for Brazil on the 10th of August (next week) kicking off a week of important reports. Brazil is expected to continue to get smaller BUT will the USDA adjust their world ending stocks appropriately in the report on the 12th? Currently the USDA has Brazil’s production pegged at 300-320 million bushels higher than CONAB so a correction would seem to be coming this week.

As you can see in the drought monitors at the bottom many areas are still suffering from a lack of rain and recent heat did not help the situation. Heat is expected to return by the middle of the month after this small break so rain continues to be welcome across the corn belt. Exports were better than expected this week; however not that large numbers that were expected.

Via Barchart                       

Soybeans had a rough week as bean conditions continue to be strong with solid expected yields. Beans have a more bearish feel right now with weather not playing a major factor one way or another. The demand has not ramped up like it did this time last year in the export markets = the bulls need to see that level of demand return to spark additional buying. The USDA’s report next week, like corn, should give us an important update on the expected demand. Current yield estimates are all above 50 bushels an acre with several over 51 bushels. Oil and meal markets have experienced weakness recently as well attributing to soybeans continued decline.

Via Barchart

Dow Jones

Despite worries about the Delta Variant, the Dow gained over the last couple weeks and finally broke out to new all-time highs today (Friday, August 6th) as companies continue to beat earnings across the board. Some states/cities have begun readopting mask mandates in hopes to slow the spread while vaccine rollouts continue.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the continued drought conditions in the northern Midwest that reaches into the Canadian planes.

PRICES

Via Barchart.com

Disclaimer

RCM Ag Services is a registered DBA of Reliance Capital Markets II LLC. Trading futures, options on futures, and retail off-exchange foreign currency transactions are complex and involve substantial risk of loss and are not suitable for all investors. Loss-limiting strategies such as stop loss orders may not be effective because market conditions or technological issues may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. There are no guarantees of profit. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. You may lose all or more than your initial investment. You should not rely on any of the information herein as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments. Opinions, market data and recommendations are subject to change without notice. Reliance Capital Markets II LLC shall not be held responsible for any actions taken based on this website or attached links. Parties acting on this electronic communication are responsible for their own actions. Past performance is not necessarily indicative of future results.