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04 Dec 2020
Agriculture, Market Commentary, Market Updates rcmagserv 0 comment

Harvest Market Updates: Parts 1 & 2 – TN, KS, SD, MS, & TX

In Part 1:
We’re doing a virtual road trip around the U.S. in today’s podcast visiting some of our favorite ag persons for harvest market updates. We’ll be travelling from Tennessee to Kansas to get you updates on market conditions, harvest crop updates, 2020-2021 predictions and more. To give us more detail about the regional nuances on these topics, we’re joined by some of the best guys in the business to give you their take on their home state:

Chapters:

00:00 Intro

01:01 Jody Lawrence – TN/Central Region – Director of Research with RCM Ag Services

39:41 Jake Moss – KS – Branch Manager, Hoxie, KS with RCM Ag Services

Find the full episode links below:

 

& In Part 2:
We’re making our way to South Dakota, Mississippi, and Texas. We’ll be covering updates on market conditions, harvest crop updates, 2020-2021 predictions and more in these three states. To give us more detail about the regional nuances on these topics, we’re joined by three of the best guys in the business to give you their take on their home state:

Chapters:

00:00 Intro

01:04 Brad Berven – SD – JES Farms in Pierre

14:05 Reed Trusty – MS – VP of Sales at Local Seed Co.

35:37 Jason Swann – TX – Ag Loan Officer at Aim Bank in TX

Find the full episode links below:

04 Dec 2020
Agriculture, Cotton, Market Commentary, Options, Podcast rcmagserv 0 comment

Cotton Commodities & Options Trading with Ron Lawson

In our first episode of The Hedged Edge we’re bringing the heat with the King of Cotton, the Emperor of Options – Ron Lawson. Ron’s experience in the agribusiness space spans over 4 decades giving him unique expertise of both agricultural business, and the business of agriculture. On today’s pod, Ron is here to share his knowledge on cotton commodities, options trading, “Lawson’s Laws,” and much more.

Follow along with Ron on LinkedIn to follow along with his popular newsletter.

Chapters:

00:00-01:30 = Intro

01:31-16:30 = An Impressive Background / What’s going on in China?

16:31-34:18 = Futures + Options / The Competitive Profile

34:19-43:06 = California Fires / Favorites

 

Find the full episodes here:

And last but not least, don’t forget to subscribe to The Hedged Edge on your preferred platform, and follow us on Twitter, LinkedIn, and Facebook.

04 Dec 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, U.S. Dollar rcmagserv 0 comment

AG MARKETS UPDATE: NOVEMBER 21 – DECEMBER 4

Corn was unchanged over the last 2 weeks as it has been range bound between $4.20 and $4.40 as you can see in the chart below. This is the first stretch like this since corn began its climb up, as there hasn’t been any new news to really propel it. China continues to be the main buyer as we have come to expect, but with no surprise sales or weeks above expectations that hasn’t been enough to break through. The break followed by a bounce is good to see as markets remain bullish, but needed a correction along with the end of the December contracts in the last couple of weeks. Chinese demand of corn will continue to be the bullish news as we look for that to continue.


Via Barchart.com

 

As you can see from the chart below beans have had a couple decent size swings in the last two weeks despite only being down 10 cents over that time. In that span we have seen January soybeans touch $12.00 and dip to $11.43 before the recent bounce back. The good news is it appears that Chinese buying should help keep some support under soybeans as they will look to be aggressive buyers when price falls (like the recent 50 cent dip then bounce back). South America will get some rain across Brazil this week, but the La Nina pattern looks to bring hot and dry weather in the coming months during an important stretch. After the fall at the start of the week it is nice to see a bounce back to current levels showing there is still bullish support. With funds continuing to be near record long, when they decide to take profit we may see dips similar to this week. We continue to hold the same strategy of not storing beans into the new year and take advantage of strong prices while if you believe markets are going higher to look at ownership on the board.


Via Barchart.com

 

Dow Jones
The Dow has traded over 30,000 several times over the last 2 weeks, but has failed to hold onto that number for a longer run up. Positive vaccine news and the possibility of vaccinations starting this month were the main driver to get it to this point. Stimulus talks have resumed as well, with some sectors getting boosts from investors expecting targeted stimulus to certain sectors (airlines as an example).

US Dollar
The USD has continued its fall over the last couple of weeks. The 3-year chart below shows where the USD is relative to the past few years and shows that we are at levels not seen since early 2018. A weaker USD helps US commodities and makes them more competitive on the world market.


Via Barchart.com

 

Phase 1 Trade Deal
Just a quick note: Joe Biden said he will not immediately cancel the Phase 1 trade deal with China or take steps to remove tariffs currently in place.


Via Barchart.com

19 Nov 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: November 14 – 20

This week’s gains follow on the news from the USDA report from last week, as well as continued export sales. As we have seen from the last two pullbacks in the chart below, corn has bounced back and reached new contract highs this week. US corn is still cheap on the world stage so we should not struggle to find countries wanting to buy from us. Exports have slowed but are still consistent and strong, putting us in a much better position this year than we were this time last year. There was some pullback from the highs as there was profit taking from the funds even though they still are very long. Corn and beans have been moving very similarly as you can see from the two charts, and we expect this to continue as the underlying fundamentals moving the markets are the same with exports and South America weather.

 


Via Barchart

 

Soybeans saw another positive week as they move for similar reasons as corn. Beans traded up over $11.85 but have fallen back from those levels the past couple of days. Central Brazil’s weather remains good as planting was 67% complete and making progress. Southern Brazil and Argentina still have a dry outlook, despite getting more rain than expected this week. Looking forward to next week, we’re expecting some more strong rain, but the promise is still slightly too far out to be confident in. Exports continue their strong run as we expect them to into the new year. World bean, bean oil and other oils (palm oil, etc) all have very strong prices. With such a broad demand strength this is supportive for beans as well. The bulls have all the factors on their side from fundamental to technical which is why we have seen some crazy intraday ranges.


Via Barchart

 

Dow Jones
The Dow flirted with 30,000 this week but did not get over the hump and has since drawn. More positive Covid-19 vaccine news came out this week with another potentially 90% effective vaccine being announced for roll out. As Joe Biden begins filling seats in his cabinet-to-be, along with the senate race in Georgia, those will be the political market movers for the time being.

Via Barchart.com

13 Nov 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Market Update: November 7 – 13


Corn saw a big boost from the USDA report this week at they lowered yield expectations and export projections for the year. They lowered the expected yield from last months report from 178.4 to 175.8. The trade was expecting a lower number (trade expectation 177.7) but was very responsive to this. They also raised expected exports 325 million bushels to 2.65 billion bushels which would be a massive number. Most of the new demand they expect to be China and S. Korea with less going to Mexico and the EU. Large exports to China keep rolling and these are expected to continue, but will vary from week to week. The continued weather problems in South America, with dryness in south Brazil and Argentina, is forecasted to the end of the month. The pullback after the jump up is expected as funds take profit as they are still long about 1.8 billion bushels. Ethanol production is slowly growing but lockdowns could put an end to that.


Via Barchart

 


Soybeans have had a very strong week following the USDA report. They did not make any adjustments to their export estimates ,but did lower yield to 50.7 BPA from 51.9 BPA. They also lowered ending stocks which was the big mover as carryout is expected to be 190 million bushels down from 290 million last month. Like corn, soybeans have some support from South American weather issues. Beans have held on to most of their gains after the report where corn has dipped back. Soybean demand will continue as China is a buyer and meal is needed as well for hog feed. Funds continue to have a record long position in beans (1.4 billion bushels). With this huge run up beans could see a 20+ cent pullback and still be seen in a bullish trend.


Via Barchart

 


Dow Jones
The Dow had a huge day Monday on Covid-19 vaccine news, but came back down to earth a little bit throughout the rest of the week as Covid cases in the US and around the world continue to surge and make new daily highs. As officials continue to warn that we are about to enter the worst time of Covid, we’ve seen lockdowns in major cities are starting to go back in effect.

Via Barchart.com

06 Nov 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 31 – NOVEMBER 6


Corn mounted a comeback to get back above $4.00 this week on export news along with South American dryness. Corn needs China to continue to be huge buyers as they try to follow soybeans higher. Corn exports this marketing year are running 179% ahead of this week last year and are already 56% of what the USDA forecasted. If the USDA raises export forecasts because they see this trend continuing, that would be bullish on the demand side as we head into 2021. Corn has not had the violent swings like soybeans but their charts look similar as exports have been their main mover. South American weather will be a market mover as we head into their growing season so keep an eye on their dryness because if it continues in future forecasts it will be bullish. The election does effect the commodities market, like every market, so there may still be some volatility as the election results slowly (very slowly) come in.

Via Barchart

 

Soybeans have had a very strong week after slipping a bit to end October. With huge export numbers continuing and a dry La Nina pattern forming in South America, U.S. bean prices topped $11 for the first time in 4 years. The factors causing this run up have still been exports and South America worries, with exports being the main factor (for now). The continued forecast of dry weather in South America is starting to get long enough to cause some serious worries about the crop, especially if the forecast keeps the trend in some regions. The U.S. Dollar has also fallen over the last week helping U.S. commodities become more favorable to other countries. As the election may be up in the air for a while for both the presidency and senate all markets will remain volatile. We continue to suggest selling all your soybean crop and not carry any into 2021 to take advantage of this run as prices in March are lower than January futures.


Via Barchart

 


Dow Jones
The Dow took off this week despite all the volatility going on with the election and so many uncertainties days later. As quickly as it fell last week it has recovered just as fast this week. Still many questions remain about the election outcome, which the market will be watching closely, but markets are banking on the republicans maintaining control in the Senate which would hinder any large scale democratic changes for the time being.

Energies
The energy sector got a boost out of the election as they believe the Republicans can keep control of the senate, which would put a fork in the “Green New Deal” or any other major energy overhauls that could have been accomplished with a democratic sweep.

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

AG MARKET UPDATE: OCTOBER 24-30


Corn is down on the week as funds took profit on their historically long positions as they have liquidated over 200 million bushels worth, still holding a large long position. The underlying fundamentals this week remained strong despite the big loses. Exports were strong again this week as China continues to buy & with bigger purchases from Mexico as farmers worry their crop may not be as large as expected. The forecast for Argentina has turned drier giving South America a concerning supply issue. As the La Nina weather pattern continues to strengthen, continued dryness looks to be in the future. The demand for ethanol going forward remains a big mystery as COVID cases continue to rise across the US and Europe. Ethanol production has not returned to pre-pandemic levels, but another shutdown could drive it back to spring levels. The fundamental outlook for corn continues to be bullish despite this week’s price movement.


Via Barchart

 


Soybeans were down on the week for similar reasons to corn. Exports were strong even though they were lower than last week’s report. Continued dryness in South America will be another bullish fundamental factor to keep an eye on as this may present continued selling opportunities after harvest if you stored any production as well as improvements to ’21 prices. The market selloff in all markets was the main problem as Covid-19 cases continue to rise around the world and uncertainty around next week’s election. Bean harvest was seen at 86% complete heading into this week. Even with snow in the Midwest, a warmer pattern looks to be on its way to allow farmers to get back in the fields and finish up harvest. Like corn, the underlying fundamentals remain bullish for soybeans if Chinese demand continues.



Via Barchart

 


Dow Jones
The Dow was hit hard this week as Covid-19 cases around the world are on the rise bringing about fear of another economic shutdown to slow the spread. Along with rising cases, the potential of delayed results from the election and uncertainty about the outcome looms large. Several of the largest tech companies in the world reported earnings this week as well.

Presidential Election
President Trump and former Vice President Joe Biden’s months of campaigning and debating will come to an end next week (hopefully). With the potential of a democrat sweep, many experts are trying to predict the possible outcomes. But if we learned anything from 2016’s election, it is that the polls are hard to get an accurate read on. As the eyes of the world are on the US Nov 3rd , the futures markets are sure to be interesting to watch.

Weekly Prices


Via Barchart.com,

16 Oct 2020
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Soybeans, Weather rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 10 – 16

Corn has continued its momentum up following Friday’s USDA report despite a hit to prices to start the week. Corn closed above the $4.00 mark for the first time since January on the Dec’ 20 contract (see chart below). This year has been different for many reasons but having the highest prices of the year come during harvest definitely adds to it. The “harvest lows” look to have been in August with the run up of 80 cents/bu, giving farmers hope after depressed prices all spring and summer. The USDA report from Friday came in with a yield estimate of 178.4 BPA and lowered the 2020 harvested acres to 82.5 million acres when estimates had it at 83.321 million acres. US corn harvest came in at 41% complete this week with favorable weather over the next two weeks to keep it going. Chinese purchases continue to roll in as they continue buying after their holiday break. Brazil’s weather outlook has improved in the short run to get some moisture but after this rain the long term picture remains unclear as Argentina looks dry as well.


Via Barchart

 

Soybeans rallied this week after gains last week and after the USDA report. Markets came down Monday on funds taking profit but have slowly come back over the last 3 days. The factors moving the market have been the same for the past several weeks. The USDA report from Friday estimated yields to be 51.9 bu/acre and 290 million-bushel stocks, almost 80 million below estimates. Harvest is 61% complete and looks to be full steam ahead with the promising weather across the US. As more uncertainty has come up this week with as China’s Premier Xi criticized the US in a speech regarding the US’s relationship with Taiwan. As the election nears US and China’s relationship will be stressed. What this will do to the Phase 1 agreement is an unknown, but China continues to need our beans which is helpful in the long run.


Via Barchart

 

Cotton prices rallied this week as flooding in India caused damage across large growing areas and possibly damaged up to 1/3 of the country’s cotton crop. With India’s cotton crop damage and Pakistan’s ongoing crop issues look for mills to look to the US for their cotton needs. Looking to ’21, if soybean and corn prices stay strong into the spring there will be a sizeable amount of cotton acres that shift to corn or beans tightening the supplies. Many experts think that the prices will be allowing for future demand to help prices as well.

Via Barchart

Dow Jones
The Dow continues to bounce around as there have been 3 down days after 4 up days. Europe is struggling with a possible second outbreak and the US continues to struggle with Covid-19. Election news and Covid-19 news will be the main market movers as vaccine trials are starting to have issues.

World Weather
The International Research Institute put out a forecast for the next 3-months for South America with expectations of normal rain and temperatures for Brazil with drier conditions for the for southern Brazil and Argentina’s main growing areas.  US weather looks great into November for a quick sprint to the finish for harvest.  Russian forecasts remain dry into month end which is driving wheat prices.



Via Barchart.com

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.

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.