Lumber | RCM Services

10 Aug 2020

Agriculture, Corn, Cotton, Lumber, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: August 1 – 7

Corn took it on the chin this week, again, as crop conditions and weather forecasts continue to point toward the potential of a record yield. With strong conditions and weather moving forward, most of the corn belt, with the exception of parts of Iowa suffering from severe drought, are running out of time for many weather factors to effect the crop. Keeping an eye on forecasts for Ohio and Michigan will be important to farmers as they could use some rain in those areas but are not desperate, yet. If the forecast continues to look promising there is not much bullish news out there to help find support with a 180 bpa crop still in play. Keep an eye on exports as we continue to see strong export numbers but little positive price reaction as a product of it. Yield estimates range from 178-183 bpa from what we have seen from across the spectrum, showing that many top experts believe a record yield could be seen this year.

Soybeans had a tough week like corn because high yields are still very much in play on top of already strong stocks. Without China ramping up their purchases to try and at least act like they are trying to reach the Phase 1 Trade Agreement; beans are running into a demand problem. Bean yields are looking to potentially be 52+ bpa with a 73% G/E rating this week saw prices take a hit. Beans and corn have been moving lower over the last few weeks as few weather issues and no large surprises in demand have come to fruition. Any problem that China has with the Three Gorges Dam area could lead to more purchases but a total failure of the dam would be a disaster as it could cause a massive loss of life along with flooding of large areas of farmland.

Cotton has seen a boost this week as it, like other raw materials have seen a boost as demand around the world starts to come back. Another supportive factor for cotton has been the continued decline in the value of the US Dollar. The threat of Hurricane Isaias effecting the crop in the SE helped give a boost early in the week but how much damage it actually did to the crop remains to be seen. If prices can breach and stay above 65 cents that would be a good level of support.

Phase 1 Trade Agreement Meeting
The US and China are set to have their first check-in meeting to assess how Phase 1 is going (spoiler alert: not great). This is on top of recent tensions over the closing of embassies and spying allegations. Not sure that anything good can actually come out of these talks but they will be worth keeping an eye on August 15^th. Hopefully we see a commitment to ramp up and get a boost to start that week following.

Lumber
Lumber continues its upward trend to price levels we have not seen since 2018. Lumber is a commodity the is easily produced because of the sheer quantity of it available supply is not an issue to slow down consumption. As many purchases and contracts are done well in advance the demand has not wavered as much as the pipeline of getting it from A-Z has. In a volatile market like this, especially during this kind of positive run for price, nobody ever wants to call the top so looks like everyone may want to ride it out and see what happens.

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 15^th 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 15^th to August 1^st period is very important to keep an eye on moving forward as the weather will be the key mover and the August 10^th 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.

19 Jun 2020

Agriculture, Corn, Lumber, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

AG MARKETS UPDATE: JUNE 13 – 19

The July corn price has slowly climbed up since the start of May, more of a crawl than a climb, but front month prices have moved up. The next month of weather will be really important for this years corn crop and decide what level of potential yields we could see. The next week looks to dump a lot of rain in the western corn belt which has had some really dry areas, and moderate amounts of rain in Illinois over to Ohio and throughout the SE. The combination of good weather and a lack of any serious exports does not bode well for corn prices. Farmdocdaily has projected future corn prices which we see as a very real possibility. A trend line yield is not good for prices at harvest time. This would be a great time to look at doing some HTAs with your elevator or hedging in your brokerage account because a >170 yield come harvest will lead to poor prices on top of poor basis in some areas (trading futures and options on futures are not suitable for all investors). It is important to also consider what government payments you have received and see how they will effect your ultimate price.

(Farmdocdaily)

Soybean prices gained a little bit this week but nothing too exciting. With another week of poor export sales, beans have been up on the week on rumors of Chinese buying despite no official confirmation from the USDA. Beans will move a little more independently as they will heavily rely on Chinese buying. The rumors of buying has gotten prices to this level, but big purchases and an effort to meet the Phase 1 trade deal would be very supportive for beans, even if the expected yield continues to be good. The June 30^th Stocks and Acreage report will be very important to keep an eye on as well in the coming weeks to get a better idea of how big the corn and bean crops can actually be.

DOW Jones
The Dow Jones continues to try and erase the loss from last weeks major selloff. Continued new unemployment numbers came in Thursday with 1.5 million new unemployment claims. The economy is opening back up, but unemployment remains high as we continue to see the fallout of COVID-19 reach into the summer. Leveling positive rates and hospitalizations have many people wanting to move further on in their cities reopening plans but officials continue to warn about the possible second wave causing businesses to partially reopen (partial reopen=not as many jobs). Until there is a vaccine this will continue to be the major mover of the markets.

Lumber
Lumber has had a solid week in gains for the prices as a few factors hit the market. The cash market has picked up in the last week and mills have ramped up their production again. The market closed over the 100 DMA earlier this week breaking that technical resistance. Housing has begun to recover and a continued recovery would be welcome for demand.

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