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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.

28 Aug 2020
Agriculture, Corn, Market Commentary, Market Updates, Soybeans, Weather rcmagserv 0 comment

AG MARKETS UPDATE: AUGUST 22 – 28

Corn saw solid gains on the week as large exports and continued weather problems were the market movers. The western corn belt looks to continue its dry run in the coming week with no widespread rain expected in areas that have been suffering from drought. This will put more strain on the crop as we head into harvest. The crop, especially in Iowa on top of the storm damage, has been fighting drought conditions most of the summer in the western corn belt so an already strained crop doesn’t look like it will get much help coming down the stretch. Large exports this week also helped give a boost as China is stepping up their purchases over the past month. Along with the rally in Dec ’20 prices the ’21 crop has gotten a boost as well to much more attractive levels than a few weeks ago. The chart below shows the rebound back to levels we last saw around the 4th of July. It is possible we have already put in a low heading into harvest as weather outlooks, crop conditions and exports have been favorable for prices as of late. Unfortunately favorable for prices does not usually mean favorable for the crop so hope exports continue because any good weather news to help the crops would be bearish for prices.

Via Barchart

 


Soybeans saw a major bounce this week as weather concerns and Chinese buying drove the market. As soybean yields are still at a higher risk than corn at this point in the year the dry weather outlook could cause some damage to the crop. Like corn, the areas already in drought conditions will continue to hurt along with areas that have just started struggling look to continue into September. The continued exports to China are promising as consistent buying in bulk would be promising of long term Chinese demand. As everyone likes to see prices going higher for this year after a long year of Covid-19 and weather, do not forget to be thinking about the ’21 prices if the rally continues where you could sell forward some of your production for ‘21 or gain some premium for storing until next summer. If China continues making purchases and the weather remains grim look for this rally to continue or hold until there is news to stop it.


Via Barchart

 

Hurricane Laura
Hurricane Laura slammed the gulf coast in eastern Texas and western Louisiana as a category 4 storm. The hurricane will bring 5-10 inches of rain and heavy winds to the western Mississippi Valley. As the storm is expected to turn northeast and dump rains on the southern Ohio Valley this weekend it will miss the areas that need the rain the most in the western corn belt. Seeing the destruction brought by the storm along the coast our thoughts and prayers are with everyone affected. (Check out some more thoughts on a hurricanes effect on futures markets from our sister company here)   

21 Aug 2020
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: August 15 – 21

Corn stayed level on the week after last week’s rally from the storm damage. Pro Farmer Tour is on the road this week looking at several areas across the midwest. The markets will be keeping an eye on them as they try and assess the damage of the storm and how many bushels were lost as well as the potential yields in areas not affected by the storm. So far the PFT has shown better than expected yield potential for Ohio, Indiana, Nebraska and the Dakotas. The parts of Iowa and Illinois to miss the storm look strong as well but storm damage is ultimately what people are holding their breathe for. Parts of western Iowa that were not affected by the storm have had another problem of their own, a severe drought that is going to cost the area bushels as well. All eyes and ears will be on the PFT as they try and estimate how many acres/bushels were lost to the derecho; more than expected expect another small rally, less than expected we could see another retreat as we head into harvest season.

 

Soybeans saw a small boost this week as China continues to be a major buyer. PFT is also looking at beans and making estimates based off pod counts so that has been a market mover this week as well. Bean pod count numbers are running well ahead of last year and historical averages, which indicates the bean crop still has above trend line potential which is bearish at these levels after the recent 54-cent rally. Several areas are in need of rain as well in the next 10-14 day window that look relatively dry for most areas continuing the trend of the past couple of weeks. At this stage beans still have plenty of ways to go to get to harvest ready so keeping an eye on them as August comes to a close will be important as well as always keeping an eye on export numbers.

 

Cotton prices gained on the week as strong exports and the concern of the possibility of a tropical storm in the gulf grew. West Texas has already had many weather issues, but the south has had a good year so far for growing but a storm with strong winds could change that. China was the biggest buyer of cotton on this weeks export report with 13 total buyers. This is promising as it would appear that other countries demand is beginning to come back after a summer of shutdowns has kept exports low. The US dollar continues to struggle providing some support for US commodities on the world stage. Continue keeping an eye on China as more rains continue to affect the Yangtze River as it reached new record water levels this week. The US and PRC look to continue trade talks in the coming days so expect any news, positive or negative, to affect the market.

 

Via Barchart.com

18 Aug 2020
Corn, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

AG Markets Update: August 8 -13

CORN

Corn, along with other crops, got a big boost on Thursday this week. After a derecho ripped through Iowa and parts of Illinois damaging millions of acres and lots of grain storage bins the market seems to be trying to price in the damage. Despite a pretty bearish USDA report this week corn has bounced on the storm and the news from the FSA of an estimated 9 million prevent plant acres, 5.37 MA of corn. This week tested both contract lows and highs for the month as traders are trying to figure out how the derecho and PP numbers are going to effect final yields and supply. Along with assessing the damage there was wide ranging damage done to the crop and some people thought some areas could rebound and still be able to harvest which is holding a big question mark over the market right now. You can see the chart below shows the rebound this week after a few weeks of losses. The USDA report yesterday estimated a 181.8 BPA yield for this year which would have been bearish if not for the weather events this week. It is important to note this number did not include the damage from the storm which some are estimating could cut over 3 bushels per acre from final yield. As we continue to learn the exact damage from the storm to the top corn producing area of the country prices will move on news.

 

SOYBEANS

Soybeans, like corn, were affected by the derecho storm that ripped through the Midwest. Even though it is not grown as much as corn in those areas it still takes up a significant portion of their acres. In the USDA report this week they came out with an estimated 53.3 BPA yield and large ending stock numbers. Despite bearish report numbers beans have seen a solid gain this week as rumors of South America running out of beans to sell seems to be coming to fruition. Another indicator that SA has oversold their crop is that US soybeans are now competitive in the world cash market. China continues to buy large amounts of US soybeans as they head into the meeting this weekend to discuss progress on the Phase 1 Agreement. 1.22 million acres of soybeans were in the 9 million total acres of prevent plant helping this week as well. In the chart below you can see the $0.20+ bounce back to the $9.00 range from the end of last week and start of this week.

 

OTHER NEWS

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 come out of these talks but they will be worth keeping an eye on August 15th. Hopefully, we see a commitment to ramp up and get a boost to start that week following.

Derecho

The storm that ripped through Iowa and parts of Illinois this week caused damage to an estimated 10 million acres and lots of grain storage bins at the farm level and elevator level. The satellite image below shows the extent of how many crops were knocked down/blown over. How much, if any, of these crops can stand back up remains to be seen, as lots of areas think it will be a total loss that will become silage or another use.

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 15th. 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.

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

24 Jul 2020
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Soybeans, U.S. Dollar rcmagserv 0 comment

Ag Markets Update: July 18 – 24

Corn held relatively steady this week after falling the past few weeks due to the June crop report. Exports have stayed consistent, but the lack of any weather problems is keeping corn in the range it is in. The cooler forecast with enough rain to support the crop is going to prevent upward price movement with the possibility of a 178 (trend line) yield still in play. China is the main buyer of U.S. Corn right now as major rains that are threatening the Three Gorges Dam area and throughout the Hubei Province have wiped out much of the non-U.S. crop.

The U.S. Department of Agriculture announced China’s largest ever corn purchase from the U.S. on July 14, totaling 1.762 million metric tons for delivery in 2020-21, and U.S. Grains Council President and CEO Ryan LeGrand tells Agri-Pulse that it’s more proof that demand is on the rise.

“We’ve always believed the demand is there,” LeGrand said. “They have been suffering from African swine fever, but they’re ringing the bell on these corn purchases.” (Ag Week)

Continued Chinese buying would be some good bullish news to balance out the bearish good weather news.

Soybeans gained on the week to reach the $9.00 mark again. China made several large purchases of U.S. soybeans this week despite the continued rising political tensions. The same destructive rains in the Hubei province that are wiping out corn will continue to have China buying U.S. ag products to make up for their potentially huge loses. The crop condition report this week was uneventful and as we approach the important stage for soybeans they look to be in good shape with the forecast being friendly as well. Beans have seemed to have had support at the 20 and 50 DMAs recently, so that should help moving forward even with the positive forecast.

A West Texas drought has been supportive for prices, but the lack of demand is the ultimate issue as prices can only move so high. If a healthy amount of rain moves into West Texas, look for prices to fall as a good yield and no buyers would present another problem. A weakening U.S. dollar may also provide some help as a lower U.S. Dollar means U.S. cotton is more affordable to other countries. In Other News see more info about the weakening U.S. Dollar.

 


U.S. Dollar
The Dollar has fallen 9.1% and made new 9 ½ month lows in today’s trade. With record U.S. debt and another stimulus package on the way, the Dollar has devalued endlessly by continuously running printing presses in DC. This is generally good for commodities as it indicates raw material inflation is on the horizon and that U.S. prices become more competitive as other currencies rally against the Dollar. Even though mildly helpful for the Ag industry, it’s not enough to fix the current oversupply problem.


(Bloomberg)

02 Jul 2020
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Other News, Soybeans, Wheat rcmagserv 0 comment

Ag Markets Update: June 27 – July 2

Corn finally got some positive news in the USDA report this week with planted acres coming in well below the March estimate and below the trade estimate. Planted acres came in 92.006 million which is about 5 million acres less than the estimate in March of 96.990 million. One thing of note from the USDA NASS Farm Labor survey that took place between May 30 and June 16, is that there was still 2.24 million acres of corn to be planted of the 92.006 million. This means that the acreage could still be lower if the entirety of that 2.24 million gets planted.  Even with the bullish acres news there was still some bearish news in the report when it came to the quarterly grain stocks report. Something that is also important to keep in mind that just because 92 million acres are planted does not mean there will be that many harvested. Even with a solid trend line yield north of 178, these acreage numbers should help. As always, keep an eye on exports and weather as the fundamental market movers in the short term.

Quickly touching on the weather outlook, there looks to be heat and dryness for the next couple of weeks in many areas. This will put some stress on the crop and this kind of forecast along with the USDA numbers from this week are the 2 catalyst moving corn higher.

Dec ’20 Chart

Via Barchart

Soybeans prices, like corn, saw a big bump from the NASS report, even though there wasn’t as much obvious bullish news from the acreage report. The acres did not change much from the March estimate of 83.510 million to 83.825 million acres. The trade estimate had it higher, trading at 84.716 million, which allowed for prices to jump up along with corn. Many people think that the acres are higher as a possible landing spot for those 5 million acres of corn that disappeared. Do not be surprised if we see more acres down the road. Soybeans in the long run still need as many exports to China as we can get going forward. The trend line yield of 50 bushels per acre is still in play with the start we have had but like mentioned above for corn the heat and dryness in the upcoming weeks could impact yield.

From speaking to farmers, it seems many farmers who planted in April and got washed out switched their acres from corn to soybeans. We are not sure how widespread this, is but don’t be surprised if soybean acres is higher when all is said and done.

Nov ’20 Chart

Via Barchart

Wheat got a boost out of the report just like corn and soybeans. Wheat’s gains came mostly as a result of following corn and beans higher as the report was not as bullish for wheat. Wheat acres were down 400,000 from the March estimates. It was welcome for wheat prices as they have been on a losing streak the last month as we look towards July for some help. If corn and soybeans continue to find support and prices go up look for wheat to be a benefactor of that as well.

Sep ’20 Chart

Via Barchart


The report was bullish for cotton as well as we have seen a rally because of it. Planted acres were down over 1.5 million acres from 13.703 million to 12.185 million acres. This is also down 11 percent from 2019. Cotton prices got a boost when these numbers came out as many acres were not planted due to a wet spring or prices being too low. Knowing the acreage number now moving forward weather in the major cotton areas will be important to keep an eye on. A tropical storm or drought, depending where, could cause cotton to jump like it has from this report.

Dec ’20 Chart

Via Barchart

Miscellaneous
Planted Acreage for principle crops dropped 7.2 million acres from the March report, 5 million of which came from corn. The big question is where did these acres go? We may see a lot go to prevent plant as only 3 million acres are estimated for PP but it is possible that a lot of acres were not planted because of depressed prices as a result of loses from the trade war the past couple years and the disruptions from COVID-19 pandemic all could be factors. Click here for the acreage report.

26 Jun 2020
Agriculture, Corn, Market Commentary, Market Updates, Other News, Soybeans rcmagserv 0 comment

AG Markets Update: June 22-26

 

Corn prices have taken a hit this week with Dec ’20 futures dipping below $3.30. Rains over the past week in the corn belt and warm temperatures will help support the crop along with rains and warm temps heading into the 4th of July. Exports continued their lackluster pace with no big sales to provide any supportive news. Tuesdays Stocks and Acreage report is the only place to look if you are looking for bullish news, but do not get your hopes up for a positive surprise from the USDA. The average trade estimate for US corn planted acres is sitting about 95 million acres which would be down from the March report of 96.99 million. With good weather forecast for pollination time keep an eye on if that changes as that would be a little supportive.

Via Barchart

 

Soybean prices took a hit this weak as no big sales were announced and growing tensions between the US and China. The administrations friction with China continues to escalate as Sec of State Pompeo is going on a full offensive to gather European support for more scrutiny of Chinese policies. The Soybean crop, like the corn, benefited from rains over the last week and will benefit from the forecast upcoming rains as well. Soybeans need the purchases from China to continue, if not accelerate, to have some bullish news. A mix of growing tensions with China and good US weather will continue to weigh on the market and should be the main things to keep an eye on going forward barring any surprises from the USDA report on Tuesday.

Via Barchart

 

DOW Jones

The Dow Jones took a big hit at the start of the week as cases begin to increase across the country in many states. As concerns of a larger “second wave” loom, markets may trade in this range until it seems we are out of the woods. The market will move on any vaccine news, news about US and China relations/trade war, and COVID-19 case numbers moving forward it seems unless the Fed comes out and does something.

Misc

As you can see from the prices below, aside from Corn, it was a relatively flat week for most other areas so the post is a little shorter this week. I wish there was more positive news out there about the markets but with everything that has happened this year and good weather there just isn’t much. It will be important to keep an eye on Sec Pompeo’s meetings with members of the EU as the week goes on.

 

Via Barchart

 

 

 

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 30th 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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