Recap:
The cash market remains weak. There’s no arguing that most items hold little to no value. It’s a tough environment, but for the first time this year, the issue is more about logistics than demand. Demand is currently steady for this time of year, but mills are in a phase where they need to clear out wood. Historically, the trade would step in, buy their first quarter needs, and store it outside to freeze. This year, the problem is that the trade has been very proactive in maintaining high inventories due to macroeconomic risks. Futures led the decline lower. Last week, there were attempts to bottom out futures, with a few bounces, but with a liquidating cash market, these are short-lived. We can’t determine when the mills are finished liquidating versus when futures have reached their bottom. All signs suggest that the market will experience a few more weeks of this condition. So what are the issues?
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The mills cannot add value to their product. We have spiked a few times this year based on a reduction in supply fear. If reduced supply is the only way to add value, it will be a long, cold winter.
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The industry is not responsible for maintaining the mill’s profits.
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Underbuilt isn’t a real number in an uncertain economy.
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It’s the economy, stupid. Lower rates mean higher unemployment.
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2026 planning should weigh less on the current, an underbuilt, and less inventory story. The macro is so much greater. In 2025, there were numerous great hedging opportunities and numerous great cash buying opportunities. Stick with the small ball.
Technical:
The RSI has been back and forth from 35% to 15% for 5 weeks now. The slow stochastics are flatlined. We are sitting in the middle of a micro flat market, which sits in the middle of a micro flat market. Maybe a better way to define it is that today’s market holds few opportunities, which has been the case for 3 years now. I’ll save you a few therapy dollars. It isn’t you or your trading. It is really a very difficult market for the entire industry.
There is a lot of support in the 520’s. We will see if the holiday week turns the market.
Daily Bulletin:
https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf
Southern Yellow Pine:
https://www.cmegroup.com/markets/agriculture/lumber-and-softs/southern-yellow-pine.volume.html
The Commitment of Traders:
https://www.cftc.gov/dea/futures/other_lf.htm
Brian Leonard
bleonard@rcmam.com
312-761-263
Corn’s Thursday rally was met with a post report Friday dip and gave up 10 cents back to $4.30. Despite the late season crop problems of drought and rust, the USDA did not find the corn yield loss that was expected and came in with a 186 bu/ac estimate, higher than the trade estimate. With higher production came higher US ending stocks, but those were not raised as much as yield as corn exports and domestic industrial demand has been exceptional this fall. The chart still looks constructive, but after a 30-cent rally in one month, the market will look to take a breather, especially after today’s report.
Beans have been on a great run higher, albeit with some volatility, until Friday’s USDA report. Coming in that hot to a report can lead to a let down which we saw to some extent. The bean yield numbers were not as surprising as corn, coming in close to estimates, but the market still took a hit. The number to look at was the US held bean imports to China unchanged at 112 MMT for the 25/26 marketing year. A flash sale report did show sales of 1.1 mbu to China around the time the trade deal was in the works. The delayed data is hard to fit with all the other news out there but China buying anything is a good sign.
