RCM Ag Services

Category: Market Commentary

  • Home
  • Market Commentary
14 Jul 2025
Agriculture, CME, Education, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: The September futures made a new high last week and held it

The Lumber Market:

The September futures made a new high last week and held it. It’s not the contract high, but a trend high. We are seeing a higher drift in both cash and futures as the deadlines near. The commitment of trader’s report has a big drawdown in the industry holding of both longs and shorts. We also saw a big jump in the funds long number. Industry trading doesn’t have a big effect on prices. The funds do. We will see if they continue to add or stay neutral.

I’m looking for a reactionary spike once the higher levels are announced the producers raise their prices. From there we have to determine the starting line and measure from it. For a year now, or since Wallstreet confirmed a Trump win, the market has been in an up channel. I will attach a chart of that below. Pure economics indicates possible offsets .

All this will take time. That is why we expect an early spike. From there it will come down to demand.

I struggle with the fact that the industry is bailing out of hedges both longs and shorts when directional risk is growing.

Technical:

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

 

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

07 Jul 2025
Agriculture, CME, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: We are closer. The end is near. No that is not a biblical prophecy, at least I hope not.

The Lumber Market:

We are closer. The end is near. No that is not a biblical prophecy, at least I hope not. Most of the announcements should be done in the next two weeks. That will hopefully put an end to all the chaos. Last week the market continued to walk itself higher. The main takeaway is the fact that the short funds are exiting their position. We saw that in Friday’s commitment of traders. We are also seeing it in the way the futures are trading. Normally the short funds will throw selling at the market to see if it could reverse the trend. We haven’t seen any of that. That is mildly bullish. Without their selling the only player left are the spec longs. They continue to push the market higher, but the discount mutes the intensity. Those are the mechanics we have been watching in the futures market. But what about the cash market?

If you step back and look at the cash dynamics, you will expect more of the same. Rallies occur when the market thins out and then falls right back after it. This steady takeaway business is three years old now. It does not create margin expansion and that limits any speculative buying. Today the speculative buying is going from 30 to 90 days inventory for jobs already booked. It is efficient and will not move the needle. The rally cry now is for more expensive wood making the inventory bottom line look better. I’m not sure that is a business plan to base the business on.

September is 667.00. In the next two weeks we will shift from analyzing what value should be to what value is. The guessing will finally get answered. That’s why I believe if we are going substantially higher it will have to be in the next few weeks.

Technical:

The futures market has now checked off all the objectives up to the gap. Momentum definition showed that if the market hit $650 it would go into the gap. It was the same in July noting a close over $600 sets it up for a run to the gap. There is nothing from here up that will call for a new higher objective.

The technical read that has not been recognized is the fact that September hit a high of 714.50 back in late March. The futures market was higher not too long ago. It also traded volume at those higher levels. The low $700’s are a real objective in Sept. Nothing fundamentally has changed since then excepted for a few more closures. Buy the rumor, sell the fact created a run up followed by a selloff of $120. Hedging is a must but continue feeding them in. Given the current demand equation, getting through the gap will be the challenge.

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-263

01 Jul 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

THE LEONARD LUMBER REPORT: The futures market continued its trek higher on a journey to find real price discovery

The Lumber Market:

The futures market continued its trek higher on a journey to find real price discovery. A report midweek about two SYP mills taking downtime confirmed the reality of less product in the future. But at the same time we saw more weak housing news compounding the problem. Add to it that Trump in now loading both barrels and pointing it at Canada. The possible 25% tariff just keeps showing up. What we do see is many items holding lower levels because of the lack of demand. There is no reason to wait on these items in today’s environment. As long as the industry procrastinates the more chance there is for a spike higher when the SHTF. If it turns out to be a non-event, sell the board.

Technical:

The midweek gap in September from 648.50 to 649.50 is a momentum gap. We can come back and close it early in the week making it more of the same or we can see additional momentum following it up. That would bring the 4-month gap of 673.00 to 708 into play. I do have an issue with a 76.80%. That is toppy without the momentum. I will say it could be less of a fact when we analyze the trade. The market shot up with the tariff announcements. These has been no resolution to it. Whatever the catalyst for the initial rally, a precedent was set. Any movement towards a tariff again pushes prices back up there.

This could take some time to play out. Owning cash at low levels with a good basis available has been the play for 3 years now. Today there is too much wood out there. It doesn’t mean you shouldn’t own some.

 

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

30 Jun 2025
Agriculture, CME, Corn, Cotton, Futures, Grain, Hedging, Market Commentary, Market Updates, Other News, Risk Management, Soybeans, U.S. Dollar, USDA Report, Weather, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: JUNE 13 – 30

Last week was rough for commodities as corn dropped to make new contract lows in Dec ’25. The charts do not look good for corn and there is no good news to help either. There are no major weather concerns and South America is producing another record crop allowing for ample ending stocks in the world. The USDA June 30th Planted Acreage Report stated that corn has 95.203 million planted acres. This number is neutral to bearish as the market was expecting a slightly higher number but anything 95+ with the weather to this point in the year looks for a huge crop. The bears have the momentum right now but there are some trouble areas and a long summer ahead to bring the bulls some help.

Via Barchart

Soybeans gave back the recent gains as well last week before the report on June 30th. Beans will likely continue to trade in the range they have been until we receive news to direct the market either on the trade agreement side or weather. The Planted Acres report had 83.38 million acres, slightly below expectations. The tax bill going through congress right now may give beans some help by getting rid of a 45z tax credit loophole but until this thing passes everything is on the table to get cut from it. Weather is good for the next 2 weeks so the market needs positive news from a US and China trade deal to give it a boost.

Via Barchart

Equity Markets

Markets set new highs after another V shape recovery following the liberation day tariff dip. Several tech stocks have led the way outside of the Magnificent 7 as AI continues to dominate headlines with spending continuing and companies talking about how it can help improve their margins.

Via Barchart

Other News

  • Cotton acres came in higher than expected at 10.12 million acres. Cotton has been stuck below 70 cents/lb for a while and while the acreage number came in higher than expected we know there are issues with the crop and a lot of abandonment.
  • Wheat, like corn and beans, yawned at the report as the numbers were close to the average estimate with no major changes. After a mid June rally, the weakness to end the month was disappointing dropping 50 cents from the highs.
  • The weakness in the USD over the past few months will be something to keep an eye on as the year continues with it trading at levels we have not seen since early 2022.
  • Tensions in the Middle East continue despite a drawdown in aggression.

Drought Monitor

Here is the most recent drought monitor.

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or blawrence@rcmam.com.

 

23 Jun 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: Just when we thought we had seen it all this year, the US bombs Iran

The Lumber Market:

Just when we thought we had seen it all this year, the US bombs Iran. With that news we see the TASE at all-time highs today. If nothing else, it is weighing on the psyche of the investor. That in turn makes the big decision of home buying more difficult. And that will keep demand and building muted. So where is the risk in the next 3 months? The biggest is risk is to the producers. The Canadians will see higher costs that can’t be passed along. The US producers, especially down south, will see prices fall below breakeven. Looking at the other risk, it is on those holding jobs short. The producer side could just shut it down causing a major temporary spike in prices. The buyer could get stuck in the middle of it. It is a mess. Now as far as the middle trader goes, volatility carries a premium in markets. They should benefit.

Last week July futures were off $10.50 on a trade dominated by the roll. The market makeup has the industry getting short eating up the funds exiting. The only other feature is that the yahoo’s are getting longer. The debate is which month is better to be speculatively long. The closer July gets to no limits the less it should be traded. Time holds the answer. Once the funds are done with the July buy side there won’t be much support.

Technical:

Technically the July is still in the neutral zone while the September is rolling over. That is the opposite of what most expect. The tech read is very fragile so not much of a run up would reverse it. They whole picture holds little opportunity. Most are relying on the pending price increases forced on the Canadians.

$100 crude is not helpful.

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

16 Jun 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: Futures were up $20 for the week

The Lumber Market:

Futures were up $20 for the week. It is a market doing a good job in developing price discovery in a chaos environment. Saturday, I  was asked to be on a call with an equities team who wanted to know what was causing the uptick. These guys a very inflation sensitive. I explained that between the CVD, AD and, tariffs prices from Canada will be going up. To what level remains to be seen. They were quick to point out that the US and European capacity could be increased. I pointed out that the quarters it would take to be a factor is too far off to put into a 2025 equation. What about demand? We are here because demand has been flat for 3 years. A macro look shows that we are fighting for every dollar higher as usual. July hit 710.00 back in early March. The futures market is actually near its low end of the range. We are flat. The trade today is trying to find a new equilibrium trading range. This is not a supply driven rally, at least not yet. It isn’t a demand push either. The rally is spec shorts covering and short funds covering via the roll. Nothing more, nothing less. I do see and uptick in the industry hedging up here. Good move.

Technical:

The RSI is 75.60. A grind to the next points of 642 and then 655 are in reach. Once we hit the gap we may have to take a closer look. The 200 day is at 618.50. History has shown us that this ends in a quick thud, so a risk management plans need to be in place. Just stair step in higher. There is no need to rush into it. The marketplace should drag the cash marginally higher.

Daily Bulletin:

Southern Yellow Pine:

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

13 Jun 2025
Agriculture, CME, Corn, Cotton, Dow Jones, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: APRIL 29 – JUNE 13

Corn continues to struggle with any rallies as you can see in the chart below every recent high is lower than the previous. The June 12th USDA report was lackluster with no real changes and not enough good news to give the bulls help. With the crop planted, 75% good/excellent, and non-threatening growing weather ahead, the bulls need a weather issue and/or positive trade news to change the direction of the market. The next major report is the June 30th Stocks and Acreage Report that tends to cause some volatility.

Via Barchart

Soybeans received great news to end the week with better-than-expected biofuel mandates from the Trump administration. You can see how the news was received after a lackluster USDA report earlier in the week in the chart below. Beans will need to breakthrough recent highs or at least stay above the moving averages they broke through to keep some positive momentum as they are where they were back in February which is at least better than corn’s price movement. Planting should wrap up soon and good growing weather will move this crop along. Beans received one piece of good news in the biofuel mandates as they await news on any deal with China to help push higher.

Via Barchart

Equity Markets

Markets have settled down after another V shape recovery following the tariff driven dip at the beginning of April. The leveling off slightly below all-time highs shows that the market is hesitant in what to expect moving forward but acknowledges that the initial reaction to tariffs with negotiations ongoing were an overreaction. While the market could fail here and move lower with negative trade news the biggest domino the market is watching is China while also keeping an eye on developments in the Middle East.

Via Barchart

Other News

  • Israel and Iran’s conflict appears to be getting worse with more attacks while the US tries to position itself to lower tensions. Crude Oil prices will watch the news as a global economic slowdown vs lower production due to war would face off.
  • Cotton has been quiet with a lack of foreign demand with global economic uncertainty.

 

Drought Monitor

Here is the most recent drought monitor.

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or blawrence@rcmam.com.

 

09 Jun 2025
Agriculture, CME, Futures, Housing, Lumber, Market Commentary, Market Updates, Other News, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: 2025 has been a year of the announcement

The Lumber Market:

2025 has been a year of the announcement. Each causing rallies. There are no supply issues or a demand push that rallies the market. The rallies are triggered by fear of less wood or higher priced wood. Neither have come into play yet, but the fear is real. That said, we are seeing each rally carrying considerably less weight than the last. My thought is that every time we get some type of verbiage thrown at us the trade steps up. It has been the same way for 3 years now. The buyers are adding to the pile each time with a “what if” attitude. They have less risk at the low cash numbers. The best risk management for the last few years has been to buy a few extra deals.

Last week we saw the attitude of a market by Wednesday entering the abyss only to get an announcement that a mill is laying off 2000 workers. That caused a short covering rally or maybe it is better to categorize it as lack of selling event. Most would agree that the margins are the tightest in almost 8 years. Everyone’s ROI is in the tank. That equates to less hedging and a more proactive exited policy of those hedges. The low trading volume allows the futures to spike up then fall. My guess for next week any support will force more hedgers out. Also, a low volume environment when the funds are rolling shorts could cause a spike. It is too hard to be short in this market. That said, I’ll bet in the long run those who did the basis and kept their discipline will go to the bank again. Fundamentals are fundamentals.

Technical:

There are two moving averages that stand out. The first is the 13-day at 596.35. The other is the 200-day at 617.60. Thursday’s trade left a gap from 598.00 to 600.50. The market has a slight sell program from an algo/fund showing up daily. Low volume does not help their strategy but does keep them in the game. That could create the selling that closes the gap from last week. On the flip side, any strength early in the week will set the 200-day as the bullseye.

There isn’t any data out there to support trend analysis. We are stuck with the technical read. The 200-day moving average is used by billion-dollar stock market companies to measure the Dow. 617.60 is the objective and we will then see if trading above it weakens some knees out there.

 

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

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

19 May 2025
Agriculture, CME, Futures, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: It was a good week for July futures as the cash attempt to bottom helped support it

The Lumber Market:

It was a good week for July futures as the cash attempt to bottom helped support it.  July’s struggle today  is its premium to cash. While there is a good amount of time left, the month can only get so far away from it. Futures tend to carry about a $30 premium to cash early in the cycle. It has been much greater in the recent past, but today’s appetite for risk is limited. The producer side of the industry will again try to rein in supply. Over the years they have not been able to limit supply to slow a bear market. Only when demand picked up where they able to gain back control. It is the same today. It wasn’t a week ago that the wholesalers were playing hot potato with cars of lumber. Like it or not, that is our real time view of the market. As I said before, one distressed widget looks like a thousand when you can’t get rid of it.

Monday, we come in no longer worried about the May expiration and more confidence that the lone widget is gone. We also come in with both the industry and the funds building their positions. The industry jumped their long position to 4575 up 504. The funds increased their short position to 3863 up1103. Now that was as of Tuesday, but the total open interest didn’t move much during our drama filled May expiration. With the industry longs, are those forward buys or speculative? Forward buys mean a better future. Speculation means a lot of selling at some point. The funds, well it is more defined. They will roll their longs at the end of the month and then roll their shorts two weeks later. It is like clockwork. The other thing that now comes into play is the trigger to force the short funds out. Yes, that is a thing. The 200-day moving average is 617.10. That sometimes is the point to start exiting, but it is so early to see them exit on this one.

Futures are not a perfect scientific data set, but it is the best source of price discovery. The May $93 spike is a good example of issues. The guy who sold it has to be a great trader.

Technical:

Looking at the upside, the large gap in July is in play. May’s spike went into its gap. The 655.00 to 675.00 will be looked at. It will need a lot of help but will get near it. The major issues are 1. the funds are selling and 2. the industry is very long. The market needs another sideways build up here over $600. This week will define the futures trade going further out.

 

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

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

05 May 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: The futures market quietly drifted lower last week

The Lumber Market:

The futures market quietly drifted lower last week ending down $15.50. July futures have been lower 13 out of the last 14 sessions. The cash market was also weak. 2×4 was off $10 while other items went into a freefall. Cash can’t create momentum, and the futures market is honed in on that. The make up in futures is also turning bearish. We saw the industry exit 486 shorts while the funds added 402 shorts. We talked about that red flag a while back. The funds and algo’s disregard trendlines and RSI’s. I have noever seen the buy side slow the funds down when they are entering. We enter the week with fund pressure in futures and a cash theory that mills will blow and go for a while before the duties show up. I’m not a fan of the wall of wood theory, but we did fill in the holes on the last run.

A few weeks ago, we started to see an imbalance developing that could lead to higher prices. That was quickly adjusted, and we are back to normal. That quick adjustment surprised me and showed that the market has not left its typical trading pattern. When the market closes in on the duty increase, prices will adjust higher. In the short run we will continue to run inventories lower until a buy round is created. Hedging is critical. A basis trade is a good strategy.

Technical:

There is nothing friendly about the chart pattern below. May futures are sitting on the 50% retracement point. A close under 549.00 sets it up for a fall to 518.50. Now this is a weekly chart, and May is expiring so it makes it tough to trade off of. What I do see is the support again sitting near 520. Today it is in May. On the 16th. it will be in the July. The market needs some help this week to find balance again. Hedge a little and hope you lose money. I borrowed that comment, but damn is it true.

 

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

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

bleonard@rcmam.com

312-761-2636

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.