Category: Market Updates

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

312-761-2636

14 Apr 2025

Agriculture, CME, Corn, Education, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: MARCH 31 – APRIL 14

Old crop corn has had a strong rally over the last 2 weeks, having a 40 cent rally after trading relatively flat since its 80 cent pullback in February. While markets were rallying before President Trump’s announcement of a 90 day pause on tariffs, they liked that news to push higher. Any positive news about negotiations with Mexico would be great for corn. The April 10^th crop report cut old crop stocks more than expected on increased exports by 100 million bushels, but a modest 25-million-bushel demand cut to US feed demand. US planting should accelerate this week as weather is favorable and where planting hasn’t started allow for field work to get done. Weather during planting will be the main factor if we end up having 95-96 million acres of corn planted.

Soybeans have also benefited from the recent rally corn has. While the rally may be losing steam until we have a better idea on how many acres will actually be planted in the US, new crop’s rally above the 20, 50 and 100 day moving averages provides some support under a volatile market. China continuing buying beans will be important as any mass cancelations will signal trade issues in Washington. As trade negotiations continue it will be important for small wins for the ag sector in all of them who are currently buyers.

Equity Markets

“Liberation Day” created sharp market selloff with the White House announcing a delay to the tariffs a week later as countries came forward wanting to negotiate. The markets are well off their highs from February as well off their lows from the post tariff announcement. As the market is in flux as they try to get a feel for what could come next for the economy (recession?) or what comes with these negotiations and China, volatility will likely remain on any headline news.

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Other News

Any progress in trade agreements with Mexico could be good for corn prices as they are our largest buyer. China needs to continue buying beans and any trade progress with them would help beans.

Drought Monitor

As planting approaches 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 [email protected].

14 Apr 2025

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

LEONARD LUMBER REPORT: Futures ran up about 33% after the election. It has given back almost 25% of it since the tariff announcement

The Lumber Market:

Futures ran up about 33% after the election. It has given back almost 25% of it since the tariff announcement. The futures market is staying within the parameters of the news. We would like the inclines and declines to be more subdued, but everything we hear is vague. That has the trade pushing buttons left and right. What’s interesting is the commitment of trader’s report that is compiled Tuesday to Tuesday. As of Tuesday, Wednesday was the crazy up day, the industry added 784 longs and liquidated a whopping 1684 shorts. The funds exited 1323 longs and added 390 shorts. That is a lot of movement for a week in this contract. A couple of takeaways:

Futures made a lower low after the massive, short covering by the industry.
The funds started adding long in the hole last time down.
The industry is seeing better activity, but the mills have wood.
The elephant in the room is again a 25% tariff hanging over the market and a rise in the duty coming.
The elephant is more a possibility while the real time fact is an oversupplied environment.
Technically we broke the channel down. It could return to the start of 527.50. That is unlikely if you add in number 4 above to the equation.

The futures market is a trading textbook. The industry is in sync and the funds are not. Under these circumstances, look for this oversupplied market to find some footing. There could be a seasonal switch flipping on this one. The spreads are getting out of line in cash. OSB?? 2×4 9ft. eastern?? There will be opportunities as prices fall in cash. If futures stabilizes the basis will pop up again. Looks like we are back to working for a living.

Daily Bulletin:

The Commitment of Traders:

About the Leonard Report:

Brian Leonard

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

312-761-2636

08 Apr 2025

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

LEONARD LUMBER REPORT: It’s hard to believe that we could start to discuss a housing problem in the near future

The Lumber Market:

It’s hard to believe that we could start to discuss a housing problem in the near future. A week ago, there wasn’t an economic reason to talk about a recession. Today it is real. The key is the stock market. No one disagrees that a sell-off was needed. The mag 7, especially Nvidia, ran the market up. Today the market is taking the froth back. What we see in equities in these situations is a massive increase in sellers. You first have to stop the selling and then build confidence back. In 2009 and 2021 the government wrote checks to get it back. That’s not going to happen this time making the confidence factor murkier. For housing it is not as simple as finding help from an equities rally. The genie is out of the bottle. Any help from the demand side has been pushed out. It’s time to sharpen the pencils again. We came into the year looking for a supply issue to help prices not demand. That still lingers…. as does the tariff. As I am writing this the Spoo’s are down 220. Stop the equities meltdown and the lumber futures will correct. The algo selling lumber futures is feeding off of the equities.

The chart below shows a channel pattern that started from the bottom of the move back in July 24. Breakeven was going to come into play eventually. Last July showed the market could not survive at such a low price. Last week’s $91 break indicates the futures market was up on froth. A close under 569.58 indicates the futures market doesn’t care about breakeven.

Lumber futures corrected the tariff rally. This week needs to see overall calm, or we could be in trouble.

*As of Tuesday, there were 5000 industry shorts that are now up $91. Good risk management!

Daily Bulletin:

The Commitment of Traders:

About the Leonard Report:

Brian Leonard

312-761-2636

31 Mar 2025

Agriculture, CME, Corn, Cotton, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weather, Weekly Prices, Wheat rcmagserv 0 comment

Ag Market Update: March 12 – March 31

The March 31 Stocks and Acreage Report did not provide any fireworks as there were no major surprises in the report with the USDA saying there will be 95.326 million acres planted. While this is a large acreage number the trade and talk the last couple weeks was about the likelihood of the USDA coming out with a 95 number. While the report could have been worse, stocks coming in exactly in line with the estimate did not pile on with bad news. As we head toward planting, weather, South America and tariff wars will be the main movers now.

Soybeans came in at 83.495 million acres as their lack of profitability at current prices is making farmers switch some acres to corn. As you can see from the chart below there have not been much help for beans but if this acreage number is close to what we see, it is hard to think they would dip much below $10. The post report action was disappointing as beans continued lower.

Wheat had bullish news from the report as acreage came in 1.125 million below estimates. Wheat has some bullish world news for price with emergence concerns in the Black Sea and US Plains, despite recent price action. News out of the Black Sea and any issues with the US crop will be market movers for now.

Equity Markets

The equity markets continue their volatile swings while President Trump’s “day of liberation” approaches on April 2 when tariffs are supposed to be going in place. Volatility will be the name of the game as many unknowns remain in the trade wars.

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Other News

Cotton acres came in at 9.867 million. This is 1.315 million acres less than last year. Cotton needs to see demand pick up to get back and stay over 70 cents/lb.

Drought Monitor

As planting approaches the drought monitor begins to become important again as subsoil moisture always seems to be a problem somewhere.

PRICES

Contact an Ag Specialist Today

24 Mar 2025

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

LEONARD LUMBER REPORT: It was a tough week for the cash market

The Lumber Market:

It was a tough week for the cash market as mills were forced to lower prices to get rid of excesses. Futures on the other hand, held value. It was a very slow volume week as the trade stayed on the sidelines. While this is normally a hard time to read the market, it is obviously much harder this year. A few keys to be watching:

I have been preaching about the high amount of inventory out in the field. Every week that number is reduced. A couple day run in cash could even things up and force the buyers back in. That remains to be seen, but there will be an uptick in usage.
I’m not a fan of the “underbuilt” hypothesis. There are too many dynamics that have to come into play to make it a factor. We saw them come into play during covid. When momentum to move increases we are far short of homes. What we have today is a two-pronged move being created. The first is once rates drop there will bring a ton of existing home inventory onto the market. That will create good sales but little anxiety. Once the trading of homes is completed, the market with feel the underbuilt condition.

The market has been in an uptrend since last July. I will have a chart below to show the trend. It tells me that the mills can no longer produce at breakeven or at a loss. The housing demand is too great for that. I said that a few years ago so take it with a grain of salt. Economics are economics and housing leads. As of today, it is looking up. Tariffs and duties are all transitory. Stick to the fundamentals.

Technical:

I love the gap on the chart below at 812.20. I know it was the old contract, but the algo and funds don’t give a shit. The next few weeks are going to be very volatile. The market could shoot $50 in either direction for a while. What if the market ran up to $720 and then down to $620. Is your risk managed?

We are going into one the most confusing week of all of our careers. Remember things never change. We will all come out of this at some point when reality is defined. Don’t get caught up in it.

Daily Bulletin:

The Commitment of Traders:

About the Leonard Report:

Brian Leonard

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

312-761-2636

17 Mar 2025

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

LEONARD LUMBER REPORT: SHIFT TO A “COST OF SUPPLY VS DEMAND” MARKET

The Lumber Market:

There has been a shift from a supply and demand market to a “cost of supply vs. demand” market. By that I mean the actual supply does not have a relationship with its cost. The cost will be driven by a tariff charge. Let’s separate the two. If there were not any tariff threats facing the market today, the slack demand would be pressuring the market lower. I have seen so many times in the past of a spring that never developed. The wood bought covered the wood needed. It’s starting to have that type of feel. Let’s take a step back. Futures are up $120 from the lows this year. We are putting it all on the tariffs, but part of it could have been the spring run. I’ll say that because demand lacks any momentum. If the tariffs came out tomorrow, prices would go up, but demand would not. I am not calling for demand to slow. I just want to be clear that today we are an “cost of supply market.” Any other year it would be a sell in May and go away. This isn’t any other year.

There are two types of hedging. The first is basis trading locking in a profit. The other is risk management or the protection of the company. This medical insurance comes at a cost and always gets questioned by the higher ups, until it works. You have to have inventory. You also have a plan to protect it in place.

Technical:

The Bollinger bands are slowly moving back together. There is a long way to go, but viewing the market getting range bound is the play until something comes out. There is a strong support line in May sitting at 632.40. I think the focus this week should be on the chart pattern in futures and not on any rumored tariff garbage. I’m not positive, but I heard of spreads on DraftKings between a college bball teams and lumber are getting sent out.

Daily Bulletin:

The Commitment of Traders:

About the Leonard Report:

Brian Leonard

312-761-2636

13 Mar 2025

Agriculture, CME, Corn, Futures, Grain, Market Commentary, Market Updates, Other News, Research, Risk Management, Soybeans, USDA Report, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: FEB 14 – March 12 USDA REPORT

First Glance:

Quiet report with no real changes made in production. The dark cloud over the market of tariffs was not addressed in a major way in this report as the demand picture remains blurred by how long the trade war could last. Nothing from the report changes the trade in a meaningful way for corn, soybeans or wheat.

Corn 24/25 US Corn Stocks: 1.540 BBU (1.516 BBU Estimate)

24/25 World Corn Stocks: 288.94 MMT (289.93 MMT Estimate)

24/25 Brazil Corn Prod: 126 MMT (126.07 Estimate)

24/25 Argentina Corn Prod: 50 MMT (49 Estimate)

Corn had a boring report with balance sheets remaining unchanged across the board. Global corn stocks were slightly lower and China imports were 2 mmt lower. Corn needs to get through technical resistance at the 50 day moving average ($4.59 ½) to see a move higher, it is currently trading at $4.55.

Beans 24/25 US Bean Stocks: 380 MBU (379 MBU Estimate)

24/25 World Bean Stocks: 121.41 MMT (124.56 MMT Estimate)

24/25 Brazil Bean Prod: 169 MMT (169.18 Estimate)

24/25 Argentina Bean Prod: 49 MMT (48.88 Estimate)

Beans did not receive much news as US bean stocks remained the same while lowering world ending stocks 2.93 mmt. The one item of note is that the USDA lowering the seed usage 3 mbu, potentially hinting at a lower bean acre number.

Wheat 24/25 US Wheat Stocks: 819 MBU (797 MBU Estimate)

24/25 World Wheat Stocks: 260.08 MMT (257.62 MMT Estimate)

Wheat was slightly changed this month with larger supplies, higher consumption, reduced exports and an increase in ending stocks. Exports were lowered for the EU, Russia and the United States. While not by large amounts (0.9 million tonnes) it was enough to move the market slightly lower with no big news in corn or beans.

Overview:

A quiet report as the market looks elsewhere for news to dictate trade. As China gets involved in the tariff war with Canada and Trump steps up tariffs on some imports while delaying others, there remains more questions than answers. News from the White House will be the main market mover moving forward until the planting intentions report at the end of the month. While South American weather is not a problem currently that is always a variable to keep an eye on as their second crop begins to take shape.

Note from the report: “The WASDE report only considers trade policies that are in effect at the time of publication. Further, unless a formal end date is specified, the report also assumes that these policies remain in place.” This is important because US tariffs on Canada and Mexico were delayed until April 2 on all products covered by the USMCA meaning theses numbers are estimates if this is resolved before then.

Equity Markets

The equity markets have given up all gains since the election in November as trade wars and tariffs dominate the headlines with the chip stocks and market leader Nvidia getting hit hard as recession fears ramp up. The global markets, after lagging the US markets for several years coming out of Covid, have ramped up recently, having a better start to 2025.

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

Other News

The tariff war is up and running as everybody tries to out tariff each other. How long this lasts will ultimately decide how much economic damage is done.
Canada has a new Prime Minister after Trudeau stepped down and Mark Carney from the liberal party took the position.

04 Mar 2025

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

LEONARD LUMBER REPORT: “Lumber, lumber, we don’t need no stinkin lumber.”

The Lumber Market:

“Lumber, lumber, we don’t need no stinkin lumber.” Or is it, Badges? Trump is coming after the Canadian lumber industry with both barrels. The problem is the current Canadian government does not like or support the industry so who’s on their side? The biggest and very unintended consequence of all may not be sharply higher prices but a real slowdown in the US housing sector. It is already fighting just to stay flat. This may just send investors to other markets, thus reducing the dollars available in the housing sector. You cool the housing sector, and you will cool inflation. Again unintended.

This is one of those times where you plan for the worst and hope for the best. It is also a time when you could have $750 lumber and no customers.

Technical:

I was dead nuts on last weekend stating that for the market to go higher it would need a sharp sell off. We saw that on Wednesday and keeping to new lumber style, it all happened in a few minutes. That’s how we roll these days. What I missed was the timing. I think we have to take a step back and consider that while the technical read tends to pan out, it now occurs in minutes not days or weeks. We have to project the move and have orders in to take advantage. Don’t freeze on winners. Manage the position based on what the cash market would offer you. More importantly, don’t freeze on losers. Get out.

Sticking with the boxing analogy…. “hit the one in the middle.”

Daily Bulletin:

The Commitment of Traders:

About the Leonard Report:

Brian Leonard

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

312-761-2636

24 Feb 2025

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

LEONARD LUMBER REPORT: The futures market continued to rally last week

The Lumber Market:

The futures market continued to rally last week. This time, the driver was the fund liquidating shorts. Two weeks ago, it was a substantial cash trade. Last week, it was the roll and liquidation. The cash trade was good last week, but the futures trade was all fund related. On Friday, a mill went off the market, which resulted in nary a ripple in futures. At this point, we need a third catalyst to help the market higher.

Factors to watch:

A slowing Euro supply
Quota information (If the producers get the funds back as usual, this is only a forced savings account and should not be added to the final cost.)
I’m not sure, but I think we went through a day or two without the President calling out lumber. At some point, you will have too much wood or not enough. Those with too much wood can hedge at a premium and wait it out. Those who do not have enough should go back to the old-fashioned way of buying deeply discounted items and running with those until the smoke clears.
Spring… misery loves company, so any consistent warm weather will wake the stragglers up. ( This is not a market factor. Anytime we went into spring bullish, we would find the wood was already bought and delivered.)

Technical:

The market broke out to the upside of the wedge, which measures $648. I am still in the camp where the market is headed. The issue developing is that this week’s trade shows up on the charts as a big negative. Lumber historically doesn’t creep higher and then explode up. It tends to trade sharply lower for a day or two. Fund liquidation won’t get the market to $648. Adding new shorts will.

If the market sentiment, which is about 95% bullish, can turn down, some higher levels will be hit.

Daily Bulletin:

The Commitment of Traders:

About the Leonard Report:

Brian Leonard