Category: Podcast

16 Nov 2022

What the hell is going on in logistics and is there any relief in sight? with Woodson Dunavant

The Hedged Edge is back online with a guest who could be this podcast’s most important guest of all time. At a time when inflation is running rampant through the world economy, drought conditions are drying up our rivers, and the global supply of grain is scarce. We are tasked with the question, “what the hell is going on in logistics, and is there any relief in sight?”
To help address these questions and more, I am joined today by a man that needs no introduction to most in the physical commodity sector – Woodson Dunavant with the Dunavant Logistics company based in Memphis, TN.
_______
Quick Links from the episode:
For more information visit Dunavant.com, follow @Dunavant_LTL on Twitter, and check out their LinkedIn & Facebook.
Questions for Woodson? Contact him at: woodson.dunavant@dunavant.com
And last but not least, don’t forget to subscribe to The Hedged Edge on your preferred platform, and follow us on Twitter @ag_rcm, LinkedIn, and Facebook.
_______

_______

 

 

 

Check out the complete Transcript from this week’s podcast below:

What the hell is going on in logistics and is there any relief in sight? with Woodson Dunavant

Jeff Eizenberg  00:14

Welcome to the Hedged Edge by RCM Ag Services where we’re getting out the field and onto the mic to bring you weekly market updates, commentary from commodity experts in monthly interviews with the biggest names in agribusiness. Welcome to winner at least it feels that way after the one of the warmest falls in recent memory. Today, the hedged edge is back online with a guest who could potentially be the most important guest of all time on this podcast. At a time when inflation is running rampant through the world economy, drought conditions are drying up our rivers and global supply of grain is scarce, are tasked with the question, What the hell is going on in logistics? And is there any relief in sight? To help address these questions and more I’m joined today by a man who needs no introduction to most in the physical commodity sector once and done event with the done event logistics company based in Memphis, Tennessee, what’s in is the Senior Vice President of agriculture and Global Network Development for the company. And as part of the fourth generation of done event family to work for the company. He worked across the globe specializing in cotton trading from 2001 to 2009. And spent four years in equipment leasing, what’s in currently serves as logistics sales and business development for event focusing on the international market. He’s a member of the executive board of directors for Donovan Enterprises, Inc, and is on the board of directors of the Memphis Cotton Exchange and the Memphis cotton Museum. He received a bachelor’s degree in finance from Auburn University. Go War Eagle. What Dr. Woodson, welcome to the show.

 

Woodson Dunavant  01:59

Thank you. Thank you. Thanks for having me, Josh. I appreciate it. Glad to be here.

 

Jeff Eizenberg  02:02

Yeah, it’s good times. I mean, my first question your Memphis with the river being as crazy as it is really concerned for the catalyst industry and the restaurant industry. You know, I’ve I’ve had lunch at Blue City cafe over there on Beale Street. The guy told me he’s, he’s, you know, cooking up 180 fish a day. What? How’s he doing in all this? Oh,

 

Woodson Dunavant  02:26

to be completely frank, he’s doing just fine. Because all his cat fish are not coming out of the river. They’re coming out of the cat fish farms. They’re all in the delta. So he’s gonna be okay. He’s gonna be quite alright.

 

Jeff Eizenberg  02:36

He’s alright. Okay, well, I thought maybe they were you know, he’s grabbing them off the bottom fish at the Mississippi or something?

 

Woodson Dunavant  02:42

No, but they are finding each day that goes by you get somebody on the news saying that they found a civil war piece of memorabilia or something, you know that the river hasn’t been this low. And however many years and you know, you’ve got all these treasure hunters that are down there looking for some and things of that nature. But, you know, the real crux of it is what is it doing to the to the grain shippers right now. And it’s a mess. In some cases, you know, the river, where we used to be able to do two barges pass on one another. Now, in some cases, it’s just one line traffic. And then throw on top of that, typically, some of these barges will be able to go to three, you know, far out, and now they’re only able to go you know, back to back, if that makes sense, to lane single. And then add in that to the fact of the river being as low as it is, then they can’t carry the payload that they would be in years past as well. So you push all that back to the farmers pocket. And you know, his supply chain costs have really, really gone up a B, he can’t move the volume that he’s used to moving. So what is he doing? In some cases, you know, they’re just going to sit and put their put their product in their in their bed or their silo, until until things get better, which, you know, there’s there. I don’t know when that’s going to happen. You looked at Long long term forecast, things of that nature, you know, a couple couple inch rain in the Midwest, it isn’t going to move the river level up by 10 feet. So you know, we’ll just have to wait and see how that how that goes.

 

Jeff Eizenberg  04:26

It’s kind of a wild ride right now. And yet, the pictures and the images are stunning people sending drones to give you pictures. I do sense. I don’t want to get too into this before we get a little bit more background. But I do have a question and maybe we’ll tackle it a little bit later about about those drunk drunk foot photos. I feel like a little more a little. Maybe not exactly the river. They’re like the tributary so kind of make it sound a little worse than it is. Yeah, so what you just described is pretty pretty dire. Um, Before we get too far into into the state of things, Watson, I think it might be best if you could just to share your background of the company. And you know why we’re even talking with you about logistics. I mean, you guys have had an extensive knowledge of logistics systems, both rail, barge, freight, etc. So if you could maybe just share a little bit of that background, and then we can jump into these problems. And hopefully, you’re not going to solve the world’s issues by the end of this call.

 

Woodson Dunavant  05:32

No, there’s no question that that’s gonna happen for sure. We might need a beer, a glass of wine to really get to the bottom of it. So yeah, so don event is a family company that started in cotton trading with my grandfather, back in the 30s. In the 40s. My father took it over, took over the business in the 50s, when his dad passed away when he was in his late 20s. So he was sort of thrown into the fire. Early on, he was down on on Front Street, where we were all the cotton traders were at that time buying cotton from the Delta and and shipping it to the US textile mills, you know, the manufacturers who were ever on the East Coast, and even in the northeast,

 

Jeff Eizenberg  06:18

they no longer exist, right? Yeah. So,

 

Woodson Dunavant  06:21

you know, we used to consume between, you know, call it 10 and 15 million bales a year domestically, and right now, we’re just north of two. And, you know, we’ll talk about this later. But, you know, manufacturing coming back and things of that nature, you know, is that, you know, is that gonna go back to 10? million? No, is it gonna go to five? I doubt it. But who knows? You know, we’ll, again, we’ll hit on Mexico and other things like that later. But yeah, I mean, it is the US textile industry is very, very small. So. So what does that mean? So, as we transitioned into that, it mean, it meant that there was a blow up in the international world for textile manufacturing, primarily in in Asia, Southeast Asia, subcontinent, so on and so forth. So as as manufacturing, went overseas, my father went overseas as well, to be able to sell, sell cotton. So we were buying cotton, you know, from the 80s and 90s, early 2000s. Were buying cotton anywhere in the world, that cotton is being grown, and then we’re selling it to the manufacturers. So

 

Jeff Eizenberg  07:35

you’re buying from Australia, India, all over the world,

 

Woodson Dunavant  07:38

anywhere there was yeah, it was Becca, Stan, Brazil, Australia. Tragic. I mean, you name it, wherever it was being, wherever it’s being grown, we were there, buying it, and then selling it to the manufacturers. So in the mid 70s, my dad made the first sale of cotton to China, which was a huge development. I think that was in 72. And then Sunday eight, we made the largest sale of a million bales to the Chinese government. So that was really a big thing for both our company as well as us. cotton industry. And now today, cotton is, excuse me, China is still the largest consumer of us cotton in the world. They have a large crop themselves, but they they have a major surplus of need of imported cotton.

 

Jeff Eizenberg  08:32

So thank you, Nike and Adidas and everybody else, right?

 

Woodson Dunavant  08:37

Yeah, yeah, exactly. All clothing, upholstery. But you know, even stuff that you wouldn’t think of what cotton goes into is manufactured over there. And a lot of times brought back over here as well.

 

Jeff Eizenberg  08:52

So with all those purchases, and sales, then comes the logistics portion. Correct?

 

Woodson Dunavant  08:57

That’s right. That’s exactly right. So it’s still cheaper for the retailers kind of looking from field to fabric here from for us to ship a bale from St. Mississippi, to Shanghai, and then bring that bring that shirt back here to Memphis, it’s still cheaper to do that than it would be to do it here in the US, which is really, I mean, you can’t blows your mind. Really, the that’s the way it is. But that’s the way it is. So

 

Jeff Eizenberg  09:25

I got to ask a question about that. So it’s so interesting to me, the way you describe it like that, is it you’re gonna get the bail here, you ship it over, and it comes back. And then is it just because you have this, your network of the supply chain there is so strong that you’re able to from a net con economies of scale, have enough flow that you have enough movement between the vessels that you’re able to then you know, take it over. You don’t have to sit on a container for, you know, six weeks for it to manufac Asher, and come back. But you have enough flow where there’s always a container ready to come back the other way?

 

Woodson Dunavant  10:06

Yeah, I mean, that’s Jeff, that’s really deep. And I really wish I could tell you that, yes, we were involved from the field in the US all the way to the manufacturer. And then back here in the US. There’s so many different segments of that Donovan is not involved in that entire supply chain. Well, that would be really cool. If we were Yeah, it’s just there’s so many different pieces to make that puzzle all come together.

 

Jeff Eizenberg  10:31

We don’t need to get too in the weeds. But I’m curious if you were involved

 

Woodson Dunavant  10:35

with with our customers with helping them move it from the field to the oversee port, and then we sort of lose track of it there. And then on our on our import side, you know, we’re responsible from once the goods hit the port in Asia, to deliver them here to the United States and the distribution facility got because there is there is a dark area, there are a gray area that we’re not involved at all,

 

Jeff Eizenberg  10:58

leave that to somebody on on their side that can speak a language and manage that process got

 

Woodson Dunavant  11:03

Correct, correct. That’s right. That’s right. So so we did all the all the cotton trading, you know, the mid 2000s, come along, you know, 2007 2008, I’m sure some of your your, your readers will remember those days now crazy thing for when the spec and hedge funds got really involved in commodities that they thought they needed to commodity bucket in addition to their bond bucket and their equity bucket. And that really changed things from us where we’re trying to keep a hedged book with against our long physicals, the market would run up, we’d have short futures against our physicals. And then, you know, in order to hold those positions, we’re having to send money margin to keep those positions. And it just got, it just got too much for my dad and our family, whereby, you know, our net worth was on the line. And it just, it became really uncomfortable from a family standpoint, from a from a financial standpoint, everything and so he, you know, had the foresight to look at possibly marketing our cotton division. To sell it, we had multiple suitors. At the end of the day, Louis Dreyfus Corporation was the one that came in and bought all of our cotton trading people and divisions around the world. So we had things that they did not have in Central Africa, in Brazil, and Australia. And so it really helped them put together, you know, the full global portfolio footprint that they needed to go to the next level. So

 

Jeff Eizenberg  12:42

it’s no surprise today, they are the largest of, you know, knowledge. They’re right there. Yeah,

 

Woodson Dunavant  12:48

that’s correct. And we were in Donovan Donovan was right there with him, we were doing between four and 6 million bales a year globally, you know, between one and $2 billion of revenue, we were spending, you know, upwards of $250 million a year in logistics. And so that’s when the whole logistics thing for us sort of sort of tipped itself off. And when we were when we made that sale to them, you know, they they did not want any of our people that were doing the logistics. So we, we kept those people and we’ve built this this Threepio, which we will go into more detail about.

 

Jeff Eizenberg  13:25

That’s great. So then how many people that are on the team today, across the globe? As I know, you have global operations?

 

Woodson Dunavant  13:32

Yeah, it’s really hard to say, to put a number a finger on an exact amount of people, we’ve got a lot of contractors, we’ve got agents, we’ve you know, so it’s a real hard number to put, I mean, it’s north of 200. But it could balloon up to if you include contractors and agents and all that. I mean, it’s a really big number.

 

Jeff Eizenberg  13:57

Sure, not to mention all the people that are involved in you know, running the rail or you know, trucking etc, you get to put everyone together in the 1000s. So it makes makes good sense. Okay, well, that’s a that’s one heck of a ride for you. You’re in the family and obviously, to get to where you guys are here today. Now, it would have been seen that natural that you’re also still heavily involved in cotton.

 

Woodson Dunavant  14:27

We are we, we do so we do freight forwarding for a lot of our old cotton competition. We do a lot of a trucking and logistics for them. The whole bucket of Donovan logistics, it’s probably 10 or 15% of what we do. So it’s not it’s not it’s not as big as I would like it. But it’s still it’s a core. It’s a core business for us. And, you know, we do everything like I just said from documentation to try Looking to ocean freight in some cases. So yeah, cotton is in our blood and we can’t get it out of our blood, nor do we really want to so the side that we’re in now, we don’t have any risk for, for cotton and being able to be in the business without risk is a good thing.

 

Jeff Eizenberg  15:17

Yeah, I agree with that, you know, that’s, we’re all in that business. And it’s, it can be heart palpitating. So, okay. 15% is cotton, what other products are involved in agriculture, or if if it can be shipped your yours,

 

Woodson Dunavant  15:35

if it’s if it can be moved in a container, Jeff, where we’re going to be involved in it. So, you know, we’ve done everything from Peanuts, to soybeans, to corn to Rice, tobacco, alfalfa, you know, just anything agriculture, you know, we’d like to, for someone to come to us with a challenge of, you know, we’re only able to get 20 tonnes in a container, well, let’s bring it to a major city or a big place where there’s heavy weight, translate it, and we’ll get 25 times in the container. So for every five moves, you’re getting a free container. So every four, so yeah, that those are the types of things we like to look at with with our customers is how can we do things different? How can we maximize our plate payload? How, you know, how can we how can we be a solution to something that they need help with and that that’s how we grow our businesses is people come to us with problems and we help solve.

 

Jeff Eizenberg  16:32

Yeah, well, listen, that’s, that’s, that’s a great service. And obviously, you’ve been able to continue to grow. So you’re, you’re based in Memphis, would that also then insinuate that a majority of the operations and movements starts and ends there on the river? Or are you also focused on the ports and the International terminals as well?

 

Woodson Dunavant  16:56

Yep. So Memphis is home. Obviously, Memphis is where our headquarters is. Memphis is, is near and dear to our heart. And Memphis is great. We love Memphis, we see the growth. We’re very bullish on Memphis. As you know, we’ve got all five major railroads here, which only Chicago has that going through them. We’ve got the largest freight airport, with FedEx moving through here. We’ve got our 40 corridor, trucks moving, you know, east to west connecting the east to west coast. 50 fives connecting Mexico with Canada. So we’ve got, you know, road rail runway. You know, it’s all here. And so we’re, we’re very bullish on that. But to your question, no, Donald’s moving product in and out of every major rail hub in the United States, as well as port, we concentrate in the southeast, and then the Gulf, Houston and Dallas, Memphis, Savannah, Charleston, Norfolk, Baltimore, Wilmington, and then an inland we’re, we’re Nashville, and Memphis in Atlanta. And as I said, Dallas, so we’re really focused in the southeast, and then the Gulf. But we’re also moving product in and out of the P and W, in the northeast, as well. And in southern Florida. So there’s no real you know, we’re, we’re spread all across. So we’re lucky in that regard.

 

Jeff Eizenberg  18:29

That’s great. I guess it really kind of circles back to, like I said, at the beginning, you’re one of the most important people in the world to be talking to you right now. If you’re, you know, you’re so spread out that you are touching so many different pieces of the overall logistics. gameplan, or footprint, let’s call it that. And we all have been hearing about all the problems that are out there. And I guess, before we just say today, this is the problem today. It seems as if this the backups and the issues and the increasing costs and everything kicked off with COVID with the COVID pandemic, and then it’s just really never cleared the system. And then now we have new problems, right, we’ve got drought and other conditions. Was it was this is it fair to say that that was really that was the kickoff the Genesis? And is is that portion of it? Or is it portion of that portion worked itself through and we’re now facing other problems? Where are we at?

 

Woodson Dunavant  19:31

Yeah, I mean, COVID changed the supply chain. Things are not going to go back to the way they were pre COVID. Right? Post COVID COVID, whatever. I mean, it’s not going back to the way it was right. That’s crystal clear. The question is, what is it going to do in the future because it’s going to change again. You know, rates went through the roof. Now they’re crashing back down, both from mostly frame rates, breakpoint rates, yes,

 

Jeff Eizenberg  19:58

interest rates are going straight up. Yeah, interest rates going up

 

Woodson Dunavant  20:01

freight rates going down. I mean, we’re, we’re in a freight recession right now, you know, importers have, you know, they couldn’t get their hands on enough inventory. Well, now they’ve got too much inventory, and they can’t move it. The consumer is not buying as much as he was, you know, they all got scared last year, a lot of the retailers and they couldn’t get their product in for Christmas time. So they brought it in super early this year. And so you know, they are chock a block full these warehouses. I mean, I was reading this morning, Jeff, historically, historically, warehouse levels are about call it 10%. In terms of in terms of vacancy rate, and okay, right now, you’re at, like, want to say, like, around 3%. And it’s literally around 10% For the last decade, and so at 3% Now, it’s a good time to be in the warehouse business. Now. It’s done like, yeah, yeah. So you know, all that’s going to change, you know, everybody’s gonna go out and get their warehouse space, and then then demand is gonna go up, you know, and then things will change. But as it stands right now, being in the warehouse business is a very good business to be in.

 

Jeff Eizenberg  21:18

Yeah. And then you mentioned, when we talked to a couple of weeks ago, something that kind of speaks to that you said Amazon did their, their Black Friday, Black Friday, a week, thoroughly, which forced even more warehousing to be space to be taken up?

 

Woodson Dunavant  21:36

That’s right. That’s right. So and it’s not just Amazon. I mean, it’s all these retail guys, they’re all in the same boat together. So, you know, with with, you know, interest rates dealing with they’re doing geopolitical unrest, unrest and Ukraine, and in that area, diesel costs through the roof has really got me concerned, both in North Europe and in here in the, in the United States. I mean, there’s just a lot of uncertainty right now. And, you know, we’re just gonna continue to service our customers and do what we know to do, and just sit back and watch, you know, some of those other things that are outside of our control, but at the end of the day, affect me, my business, your business, my pocketbook, your pocketbook. So, you know, a lot going on right now. And obviously, the China and Taiwan deal. I mean, it, there’s a lot to be keeping around right now.

 

Jeff Eizenberg  22:34

Right. And there was a period in time when, you know, we saw the pictures on the news of, you know, 500 or 1000 boats back at the LA port. And, you know, a lot of that issue cleared the port issues

 

Woodson Dunavant  22:50

that cleared up, or I wouldn’t say it’s, I wouldn’t say it’s cleared. But it is, it is working itself out. The issue now is in Savannah, I think they’ve got 20 or 30 vessels awaiting birth there. So you know, once everybody saw everything in LA, they were like, alright, let’s switch everything to the East Coast, into the Gulf. And so you’re having some residual stuff there on the east coast, but you know, it that’ll work itself out, especially with demand dropping right now, I mean, a lot of our import clients have, you know, where they were doing, call it 30 to 50 containers a week of product, you know, they’re less than 10 an hour. And that’s, that’s material, you know, that that’s a massive drop in volume, the ocean carriers are pulling, pulling service out of the market to try to stabilize rates. So where they had four vessels that were on a string from Shanghai to LA, well, maybe they’re only doing two now. So you know, that that’s what they do in order to get their rates back up as they pull capacity on the market.

 

Jeff Eizenberg  23:58

But sounds like the airline industry, I think I paid like $800 to fly to Dallas a couple weeks ago, like really good. Two years ago, you were giving me a flight for $120.

 

Woodson Dunavant  24:11

We looked at going out west for spring break. And I can’t even tell you what it’s going to cost to fly a family of five from Memphis to Utah. I mean,

 

Jeff Eizenberg  24:22

we’re doing it we’re going to Park City and thankfully, I have a friend who has a place to stay but man, aside from that, I’m not

 

Woodson Dunavant  24:32

Yeah, it’s, it’s, it’s crazy. So so that’s what the that’s what the ocean liners do, as well to take capacity out of the market in order to stabilize rates. So, you know, they’ve done quite the ocean carrier community has done quite quite well in the last couple of years. So we shall see. You know, we should see how they prevail going forward, but I would think they’re going to be okay.

 

Jeff Eizenberg  24:59

Okay. circling back to commodity markets here. And I’m curious to the back to the river, I guessing that believe something like 60% of all US exports run through the Mississippi, and you were describing this one lane traffic versus multi lane. You know, as I start to think about what this is going to mean, have you seen a shift where people are, your customers are starting to, you know, hire rail and truck and, you know, incur those additional costs that are associated with having to move off the river? Or are you or our or our people, like you said, farmers just stuffing their bins full and the rest of world has to wait?

 

Woodson Dunavant  25:44

Yeah, I think that’s what you’re gonna see. I mean, you look with demand slowing down. That’s a good thing right now, what you would never say the demand is a good demand slowing down is a good thing from a farmer’s perspective. But to answer your question, I mean, we’re not seeing the grains go from, from a barge to, to the road, for example, me, you’re not, you’re not seeing, because at the end of the day, most of those sales are our bulk sales. So the product has got to move in bulk, you know, and it’s not going to be able, you’re not going to be able to move it to Memphis, and then, you know, I guess you could bulk rail it and translate it at a port. But if you’re not already doing that, in order to set something like that up, I mean, your costs are gonna go through the roof. And so yeah, I think it’s just kind of a sit back and wait, right now do what they can and try to fulfill the contracts if they can, and just just do their best. I mean, look, what the dollar is strong as it is, you know, that’s hurting them as well. So, you know, the farmers are going to be okay. But, you know, they’re just gonna go through a rough patch. And unfortunately, right now, from a timing standpoint, you know, all the crops are coming off right now. And so, you know, they want to get them on the move and get get them out and get ready for new crops. But that doesn’t look like that’s going to be the case next year.

 

Jeff Eizenberg  27:03

Well, you know, people can wait for close, they can’t really wait for food. So at some point, the basis is going to have to shoot straight up or, you know, they’re gonna have to figure out other solutions to get moving unless, of course, we you get some of the rain. And I guess, you know, you’ve been doing this long enough. 2012 was another drought year, and because we’re reading that the river was, you know, significantly low at that point. What was your experience in that timeframe? And how long did it take before you started seeing things kind of working more normal? Again? Not March or April or May that this? Yeah. potentially even subsides? Yeah. It?

 

Woodson Dunavant  27:44

I mean, it just depends on on on weather. Really? But yeah, I think spring is what you’re looking at. Once you get the snow melt off from the Midwest. That’s what typically always give the river its strength in its in its last as is that Snowmelt Runoff from north to here. And then that obviously takes it all the way down to New Orleans. So yeah, I think it’ll be spring, at the earliest. So, you know, hopefully, we can get, you know, enough enough rain and wet weather around here to be able to come back up a little bit, but it’s not going to be able to go back up to where it needs to be until until the spring.

 

Jeff Eizenberg  28:30

Let’s shift over here a little bit. You’ve mentioned the work and expansion of the company over the years. And, you know, I read an article that you guys posted, maybe earlier this year, on the growth in Mexico, do you just maybe talk to us a little bit about what you’re seeing there? Is it? Is it what’s what problem are you solving by expanding into Mexico?

 

Woodson Dunavant  28:55

Well, we’re, what problem we solve. And so we’re helping solve our customers problems. That’s what we do. And, you know, we saw an opportunity, with things in Asia slowing down of people and things moving, you know, not reshoring to America, but nearshoring to America. And you know that that’s where Mexico comes in. I mean, I’ve talked to multiple people, you know, over the past few months and even years, you know, maybe the quality of the product produced in Mexico doesn’t meet what it is in China, but they are somewhat competitive from a labor standpoint. So if we can get that quality then then I think you would see a massive, massive move to manufacturing in Mexico. So we saw an opportunity we’re it done event has operations at every border crossing from Laredo all the way to Tijuana, and everywhere in between. So we’re moving product both in and out via truck and rail. We have cross docking, we have warehousing. So you We’ve got a gentleman that runs that operation for us who use, I still need to introduce you to and your team, because I think y’all would be benefit to hear from him and what his capabilities are and how, you know, he can help you and some of your customers out with what he’s doing even enter Mexico, not not to mention the border. So we’re very bullish on Mexico, and the US and where that partnership is going to go from here. And so we are

 

Jeff Eizenberg  30:28

going both ways, right? You’ve got grains and other goods going into Mexico. And then as you’ve just described a little bit ago, how if there’s a chance for us to match the labor and quality, then if we move some of our texts will like, not us. But if some I’ve heard that China is buying up some textile factories and whatnot in Mexico, if they could replicate the work there, but just be closer to us that, then now you’re going the other way, right? You’re bringing it back in?

 

Woodson Dunavant  30:58

That’s exactly right. That’s exactly right. And, you know, it’s just it’s been a great venture for us. You know, the more and more we look at it, the more and more we like it, and the more bullish we are on it. So yeah, I’m very, very happy with where we’re going there, for sure.

 

Jeff Eizenberg  31:14

I was talking with a group today, and he was talking to me about Mexican ports, and how the terminals are hardly back over there, and only the largest vessels coming in. Is that been your experience as well, that these port contractors are very long and extensive? And just to break into that it would be difficult? And ultimately, I guess that would mean that there’s better chance for some of this rail and solutions? Yeah,

 

Woodson Dunavant  31:42

I mean, you know, I think in Mexico is a lot of people know, I mean, you’ve got to know the right people in order to get things done. And, you know, while while there might be longer contracts in place, I think that, you know, you can still get things done if you know, the right people there. Right. So, you know, I think that’s what the name of the game is there for sure.

 

Jeff Eizenberg  32:04

Is there other any other countries or regions that you’re focusing on other other than, than the Mexico opportunity? And obviously, you’re doing things in Asia? But yeah, I mean, you coming on? You

 

Woodson Dunavant  32:18

know, we’re, we’re pretty bullish on Vietnam, we’ve got a contingent going over there, I think in the next three weeks or so to go check things out, you know, they suffered from a lack of land and people, but, you know, they, everything that they’ve done is is very impressive. From a port infrastructure standpoint, from a manufacturing standpoint, from a labor standpoint. I mean, you’ve got invest foreign investment from all over the world going into Vietnam right now. And, you know, we’re, we’re quite bullish on on the goings on there, and so much, so I was, like I said, we’re sending sending three executives over there in the next few weeks to go to go investigate further and for sure, do you?

 

Jeff Eizenberg  33:05

Are you taking a translator? And are you on this? Are you on this contingent?

 

Woodson Dunavant  33:11

So luckily, we, you know, we don’t really need translators, we have agents and people that we work with, over there that are able to do that for us. So years and years and years ago, when we travel over there, you’d have to, you know, you’d have to have a translator, whether it was in China or Vietnam, or wherever, in Asia, you’re going nowadays, you know, with with as many agents in the network that we have, we’re able to go over there and get around and you know, to be completely honest, English will get you a lot further than you think, especially in Asia. It really will

 

Jeff Eizenberg  33:45

you heading on this trip, or you’re,

 

Woodson Dunavant  33:47

I’m not unfortunately, I wish I would I wish I was Vietnam was one of my top countries in the world that I’ve ever visited, both from a food standpoint, from a people standpoint, from a manufacturing. I love love Vietnam is awesome. Vietnam, Thailand and South Africa are the top three for me, for sure.

 

Jeff Eizenberg  34:10

Sounds good. So you know, this has been a it’s been a great conversation, what’s in it for you know, my takeaway from what you’re saying here is that we all need to think differently in the new environment moving forward, that it’s going to take strategic partnerships, it’s going to take innovation from different companies like yourselves, to come up with better solutions to move products and goods. And achieve really at the end of the day. Our goal of our company and the people with our clients we work with is to help them maximize their margins. And so it sounds like you’re very much aligned with that perspective.

 

Woodson Dunavant  34:48

Absolutely. Absolutely. If you get if you get if you’re comfortable in your supply chain right now, watch out because there’s a change coming and you know it like I said, we’re here to provide solutions when customers have problems, or they want to look outside the box, that’s, that’s who we are. And that’s what we want to help them do. And, you know, it’s a new normal that we’re in, you know, it may only last another three to six months, and then we could be hair on fire was something else. I mean, who knows? That will happen? Because, you know, I wish I could tell you that, you know, things will go back to the way they were. But as we all know, once you have a catastrophic, cataclysmic shift in supply chain, which we have had pre COVID to COVID to now. It’s a new way of doing business. And yeah, so it’s, it’s fascinating. The one thing that we didn’t touch on, was, I think you want to real quick on the rail issue.

 

Jeff Eizenberg  35:46

Oh, yeah, please. Yeah. What’s the story? Are they is it Congress is the only one that could solve this or what’s going on?

 

Woodson Dunavant  35:52

So they did they have originally they had said the 19th of November, they just extended it to December 4. And so they’re gonna have another couple three weeks negotiation, which I view is a very positive development. At the end of the day, Congress and or president are gonna have to step in, because if you were to have that happen, I mean, you talk about you think that the LA Long Beach strike was a big deal. You talked about stoking inflation. I mean, it would be tattered. Strophic, if we had a major rail, strike, I mean, you know, 40%, of, of all goods, in terms of weight is moving on the rail. And if you if you were to stop that, I mean, you can’t get from a food from a retail from you. I mean, you just goes on down the list. I mean, it would be I can’t imagine that the government would allow that to happen, though, they will step down at the 11th hour, if it gets to that point and put their foot down, they have to,

 

Jeff Eizenberg  36:57

yeah, I mean, everything with the just in time production that we have here and consumption in the United States, if even a day or two delay when we’ve seen with, you know, weather conditions or something backs things up, and it takes months for it to work through. So if you started if you had weeks or months off, oh, my goodness, you’re,

 

Woodson Dunavant  37:19

I mean, to your point, even even five days, like something like that would set us back by, you know, three or four months. I mean, it’d be crazy. So I do not think that that will happen. So you can come back and poke me when they do strike and then everything shifts.

 

Jeff Eizenberg  37:36

Instead, it was not gonna happen. Place your bets. Yeah. We get it. I appreciate that insight. Because then yeah, you’re at the pulse of it. I mean, I assume that the people in the rail industry don’t want it to happen either. But they also want to be paired paid fairly and get proper compensation. So

 

Woodson Dunavant  37:53

that’s right. That’s right. You can’t fault him for sure. Yeah,

 

Jeff Eizenberg  37:56

that’s exactly it. Well, no, this has been extremely good and extremely helpful beneficial to I think everyone listening and, you know, welcome, welcome. You obviously share it yourself. I always have one final fun question for everybody. And it’s what is your favorite extreme sport that you either participate in or would participate in if you maybe were back in your yet 20 year old buddy?

 

Woodson Dunavant  38:20

Oh, Lord and mercy, stream sport?

 

Jeff Eizenberg  38:25

I mean, you talk duck, honey, that’s kind of the kind of counts.

 

Woodson Dunavant  38:28

Okay, well, if that counts, then I will. You know, it’s an extreme sport, in some cases, for sure. Yeah. And I really enjoy it. So. Yeah, I mean, that would be that would be it for me. For sure. I was thinking more like MMA or boxing. Oh, yeah. Well, you could do that too. I mean, I really miss heavyweight boxing. And, you know, back in our day was was was when Tyson and Lewis but even before that, I mean, you know, we would block an entire night out, you know, to get ready for the boxing match. And I mean, it’s it feels like it’s gone. Like, MMA has just totally taken it over. But I mean, I feel like there’s still a space for good heavyweight boxing, and it just, it’s gone. It feels I just, I really miss that.

 

Jeff Eizenberg  39:15

Maybe Tyson was the pioneer of it, because when he bit Holyfield’s ear, nowadays, MMA if you’ve met somebody there, they might be like, yeah, that’s okay.

 

Woodson Dunavant  39:23

That’s right. That’s right. There’s no doubt there’s no doubt so

 

Jeff Eizenberg  39:26

pretty good. Oh, what’s the what’s the best way to get a hold of you have people had to want to want to connect?

 

Woodson Dunavant  39:33

Yeah. So reach out to me. My email address is very simple with some data of it. I’ve done have a.com Email me, you can give me a call. And happy to talk through anything with anybody importers, exporters, domestic domestic folks here in the US anything cross border. If I don’t know the answer, I’ll put you in touch with somebody here. That does. We’ve got we’ve got IT experts all over the place. Donovan, I’d be happy to put you in touch with whomever you need to talk to. So we’re, we’re really excited with our growth and where we’re going. And, you know, we’re just we’re in a we’re in a really good place right now. So, Jeff, I appreciate you doing this. I’ve enjoyed getting to know you over the past few weeks, and hopefully this won’t be the last time I talk to you.

 

Jeff Eizenberg  40:24

Yeah, we’ll do it again. We’ll check back in whenever fills back up. All right.

 

Woodson Dunavant  40:27

Sounds good, Jeff, appreciate it. So much

 

Jeff Eizenberg  40:29

Appreciate the time. Yep. Take care. Thank you.

 

 

This transcript was compiled automatically via Otter.AI and as such may include typos and errors the artificial intelligence did not pick up correctly.

 

21 Oct 2022

AG MARKET UPDATE: OCTOBER 14 – 21

Corn had small losses on the week as harvest continues to roll on. The major ongoing story is the low river levels impacting barge travel along the Mississippi and other major water ways. This is having an impact on basis levels along with exports. Exports for the week were within estimates and ethanol output got back above 1 million barrels for the first time since early August. The exports will be the main factor to keep an eye on in the short term with no immediate relief expected for the Mississippi River with barges backed up and delays on both sides of the supply chain. The drought conditions compared to this time last year can be seen at the bottom, showing how much moisture is needed over the winter.

Via Barchart

Beans made gains this week with China showing back up as buyers but still has a bearish outlook with South America expecting neutral weather. Harvest continues to roll on with 63% done and nothing slowing it down. As always, the US needs to sell their beans before Brazil gets closer to harvest, with a potentially record crop coming from Brazil this year. If China continues to buy and Brazil begins to have weather issues, we could see a rally, but the Mississippi river issues and other bearish problems may have the upper hand currently.

Via Barchart

Equity Markets

The equity markets were positive again this week with mixed earnings and option expiration pushing markets higher. Next week’s earnings will be the most important and set the tone for the rest of the year with Apple, Microsoft, Google, Amazon, Exxon, Visa, Facebook, and many more. The guidance these company’s give will show where the largest companies in the world see the economy in the next 3-12 months. While this month’s trade has been encouraging, many investors think is just a pause before we move lower again, next week may give us a better idea. Mortgage rates topped 7% again this week as the housing market continues to face the fallout.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand compared to this time last year.

October 18, 2022 Valid 8 a.m. EDT (Released Thursday, Oct. 20, 2022)

October 19, 2021 Valid 8 a.m. EDT (Released Thursday, Oct. 21, 2021)

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

Via Barchart.com

 

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.

 

14 Oct 2022

AG MARKET UPDATE: OCTOBER 7 – 14

The USDA report this week did not make any major changes to the US corn crop estimating a yield of 171.9 bushels per acres, down .6 bu/ac from September. The lack of surprises in the report kept corn trading along its path of late with no major losses or gains. The ending stocks were raised on lower demand with a high USD and world recession fears looming. While the balance sheets remain tight for corn but the recession fears lowering demand eases the balance sheet worries, for now. Harvest is still rolling along with much of the US experiencing drought conditions and no major rains in the forecast for many areas to slow it down much.

Via Barchart

Beans were the surprise of the report with estimated yields falling to 49.8 bu/ac, down 0.7 bu/ac from the September report. US ending stocks were also cut with the yield lowering getting an appropriate reaction higher aster the report. The main concern for beans right now is low demand and the potential of a record Brazil bean crop. The strong USD weighs on bean exports with China being slow buyers, as we have said before to start feeling better about the direction of beans’ price, we need China to show up more often in larger quantities.

Via Barchart

Cotton continued lower this week following the USDA report that saw a bearish reaction despite lower production estimates. Cotton is still fighting the supply vs demand issue to figure out where to go. Right now, the demand, or lack thereof, is winning as prices have been moving lower over the last 2 months. World recession fears impact the demand for cotton with lower demand balancing the lower production. The lack of demand makes it difficult to see a sizeable move higher in the near term but for cotton to be planted in areas that could grow corn and soybeans these price levels will not be attractive. We could potentially see a sideways trade until there is more certainty economically (demand) going forward.

Via Barchart

Equity Markets

The equity markets were positive this week due to a massive rally on Thursday to gain back the week’s losses and some. Inflation came in hot, again, this week giving the Fed the go ahead to raise rates another 75 basis points in November if they want to with a 15% chance of a 100 point raise. The market rallied on the CPI number, despite it being high, showing that there is still room for bounces in a bear market. It is hard to find much good news in the market with the proposed deal between the Biden administration and Rail workers unions falling apart this week as well, bringing the possibility of shutdowns back.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week. As you can see much of the country is in drought conditions and will need moisture over the winter.

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

Via Barchart.com

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.

29 Jul 2022

AG MARKET UPDATE: JULY 21 – 28

Corn bounced back this week as hot and dry August forecasts returned across the western corn belt, and eventually are forecasted to move east right in the middle of pollination.  To be clear – hot and dry while pollinating is less than ideal.  In addition, the weekly crop ratings came in lower with the national good/excellent ratings estimates at 61%. Ratings have lowered 6% in the last month, and with the current forecast this trend is likely to continue. All these factors together, along with a weaker US dollar, helped the rebound for the week. While this turnaround has been nice on prices, the yields are a concern, and it will continue to be important to monitor pricing into the weekend and start of trade on Sunday.

Via Barchart

The forecast change has also been supportive of bean prices as August is an important month for yield development. Soybean supply and demand has been tighter over the years and if we lose 1 or 2 bushels in national yield it will result in a big hit to world supply. September beans traded over the $15 mark for the first time in a month with this week’s gains. The November contract has the potential to reach back over $15 with the current momentum, assuming no new bearish forecast changes over the weekend. Soybeans good/excellent ratings came in at 59% nationally, following the worsening trend that corn has had, losing 4% g/e in July.

Via Barchart

Russia and Ukraine

Reports were that Russia and Ukraine had agreed to a safe export corridor, and then…. Russia bombed another port (imagine that)… so that did not last long. Russia wants any obstacles to Russian agriculture exports to be eliminated, which seems unlikely. White House spokesman John Kirby either majorly misspoke or lied this week claiming that there were 80 ships ready to leave the ports with 20 million tons of Ukrainian grain. The largest grain shipping vessels can only hold about 60,000 tons so if there are 80 ships.  Quick math here = they will only be able to ship 4-5 million tons. Luckily this did not spook the markets as traders knew this to be the case with SovEcon saying there are no more than 10 such ships ready to ship grain. The mines remain in the shipping corridors and this conflict will continue to drag out through the summer.

Equity Markets

The equity markets had a good week following a few down days with some strong earnings and some misses. The Fed unsurprisingly raised rates 75 points this week leaving what comes in the next rate hike up in the air. The 2nd quarter GDP posted another negative number after posting a negative first quarter. Historically 2 consecutive quarters of negative growth signals a recession. There are lots of challenges right now with inflation still a major problem but with companies lowering guidance for the rest of the year the current economic slowdown may continue.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

 

Via Barchart.com

 

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.

 

 

22 Jul 2022

AG MARKET UPDATE: JULY 14 – 21

Despite a brutal stretch of hot and dry conditions, Corn prices have continued to struggle, tied in with ever changing forecasts looking at favorable conditions ahead. In total, the trend is clearly down with the cooler forecast for the corn belt and a potential for trade in the Black Sea to resume. Energy prices have also fallen pulling other commodities with it as Russia re-opened the Nord Stream pipeline into Europe (at less than 50% capacity). While prices have retreated to pre-Russia invasion of Ukraine, the potential for a sub trend line corn crop in the US remains. Basis is still strong in many areas showing that there is a disconnect and some areas are very worried about potential yield loss.  Weather during the first half of August will be huge for this crop – as forecasts change so will prices.  Expect more volatility ahead!

Via Barchart

Patterns in Soybeans have been almost identical to Corn – ever changing weather conditions along with uncertainty in global demand are driving prices lower.  26% of soybean production is in areas currently experiencing moderate to severe drought. The weather coming up is important for beans as well; if the cooler forecasts do not come to pass and hot and dry conditions continue beans should see a bump in price. Old crop exports were strong this week while new crop fell in the expected range.

Via Barchart

Equity Markets

The equity markets rallied this week stringing together several positive days despite all the concerns of recession and inflation remaining in the market. This appears to be an area that is tradable as many equities are off their lows on the year but still well below the highs. Q2 Earnings have also given some guidance as companies have taken inflation and other rising costs into account for what to expect ahead. Tech stocks have also gotten a big boost this week along with crypto.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

Via Barchart.com

 

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.

 

15 Jul 2022

AG MARKET UPDATE: JULY 8 – 14

Corn had a volatile week suffering losses to drop back to levels it saw at the start of last week. The USDA report on Tuesday this week wiped out the gains from last week after a bearish report. Ending stocks came in higher than expectations, not by much, but enough to be bearish. The recession fears affect every market and corn is no different as ending stocks will grow as less ethanol is produced and other uses will lower. The weather is the bullish factor in the market right now with hot and dry conditions expected across much of the corn belt during pollination. The longer this weather outlook stays, the more bullish it will become as yields struggle. Russia says they have agreed to a safe export corridor for Ukrainian grain.

Via Barchart

Soybeans took it on the chin post report just like corn. While the report numbers were not overly bearish the loss in crude oil and soy oil prices have weighed on beans lately. The weather issues for corn are not as big a concern for soybeans (yet) but will be something that could come up in the future. South American yields are still hard to get a full picture of with the USDA still differing from many estimates. China canceled a bean purchase on top of a poor export report for the week.

Via Barchart

Cotton has continued its move lower despite widespread abandonment in west Texas. This comes from the expect of demand destruction with a potential worldwide recession ahead and producers sitting on plenty of supply. Prices could be even worse if the US was having a good growing season, but the demand destruction along with a very strong US dollar does not help cotton. With the loss of many hedgers in the market due to the loss of crop, specs will be the market mover, trading on technical indicators, not fundamentals, for the foreseeable future and will decide the direction with mills on the sidelines too.

Via Barchart

Equity Markets

The equity markets continue their game of “recession or not” with the up and down trade. Another hot CPI number of 9.1% came in this week, the market was expecting it to be in the high 8s so this was still a bad number. While commodity prices have come down other areas of the market remain painful. Earnings this week were disappointing for banks kicking a market that was down and needed some positive news. The market will continue this back-and-forth game until everyone decides we are in the clear or the recession is unavoidable.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

There is an agriculture tug of war happening across the nation, impacting America’s farmland. Fertilizer prices are continuously fluctuating, and it has us taking a page the “The Clash” should we stay, or should we go?! And we aren’t the only ones. Many farmers are asking their agronomist and chemical salespeople, “what will fertilizer cost me the rest of the season, and what are my options if I don’t want to go all-in on my typical fertilizer treatment plan?”

In this episode of the Hedged Edge, we are joined by a special guest who needs no introduction in his local circle, Dick Stiltz. Dick is a 50-year veteran of the fertilizer and chemical industry and is the current Agronomy Marketing Manager of Procurement fertilizer and crop protection at Prairieland FS, Inc in Jacksonville, IL. He is at the pulse of the current struggle and here to discuss the topic at hand.

Via Barchart.com

 

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.

 

01 Jul 2022

AG MARKET UPDATE: JUNE 23 – JULY 1

Corn reacted negatively to the Stocks and Acreage report this week despite there not being any surprises and the numbers coming out close to pre-report estimates. Planted acres came in at 89.921 million acres (89.861 million estimate) and June 1 stocks were 4.346 billion bushels (4.343 billion estimate). The bearish news is improving weather after the 4th of July with rains expected across most of the corn belt. The concern over the wet spring causing prevent plant acres in ND and MN does not appear to have come to fruition with high prices motivating farmers to get the crop in the ground. Trading resumes Tuesday morning after the long weekend so any change in weather or world news could lead to a volatile opening after another kick in the teeth on Friday.

Via Barchart

Soybeans had a good week making solid gains before dipping after the report and then getting crushed today (Friday). The bean planted acres was 88.325 million acres (90.446 million estimate) and June 1 stocks was 971 million bushels (965 estimate). The acres number was surprising as it came in 2.121 million acres below pre-report estimates. While the favorable weather for corn is also favorable to beans, they have a different story than corn to follow. Chinese demand needs to return to the market but 2+ million acres of production is a lot to be off by. The inability for Soybeans to break out higher following the report shows that they still have a fight ahead of them and that outside market risks likely have an impact on prices. Friday’s trade hit beans hard and the long weekend holds uncertainties.

Via Barchart

Wheat moved lower on the week pre-report and continued lower after it with no surprises only to get crushed on Friday. All wheat planted acres were 47.092 million acres (47.017 million estimate) and 660 million bushels in June 1st stocks (655 million estimate). After a tough Friday, wheat has plenty of non US weather related news to follow and any developments over the 4th of July weekend will be seen on Tuesday.

Via Barchart

As you can see in the chart below cotton has had a rough 2 weeks. With demand expected to decrease with the possibility of a recession coming, this reaction is clear and puts fiber prices at the mercy of the economy’s future. The other side to this is that US production will likely be lower than expected with so much dryland in west Texas and other serious drought areas (see map below) expected to not produce a crop. Growers planted 12.5 million acres in 2022, up 11% from last year.

Via Barchart

Equity Markets

The equity markets were relatively flat on the week after a few up and down days. The market headlines keep being “market rallies as fear of recession lessens” or “market falls as recession fears remain” so the market is still looking for guidance as it continues lower. July’s news will be similar to June with inflation and the Fed being the main drivers.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

There is an agriculture tug of war happening across the nation, impacting America’s farmland. Fertilizer prices are continuously fluctuating, and it has us taking a page the “The Clash” should we stay, or should we go?! And we aren’t the only ones. Many farmers are asking their agronomist and chemical salespeople, “what will fertilizer cost me the rest of the season, and what are my options if I don’t want to go all-in on my typical fertilizer treatment plan?”

In this episode of the Hedged Edge, we are joined by a special guest who needs no introduction in his local circle, Dick Stiltz. Dick is a 50-year veteran of the fertilizer and chemical industry and is the current Agronomy Marketing Manager of Procurement fertilizer and crop protection at Prairieland FS, Inc in Jacksonville, IL. He is at the pulse of the current struggle and here to discuss the topic at hand.

 

Via Barchart.com

 

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.

24 Jun 2022

AG MARKET UPDATE: JUNE 9 – 23

Corn had a rough week along with the overall commodity selloff the past few days. While the weather forecast has become cooler it is still going to be hot, and a lack of rain remains across much of the corn belt for the next week with higher chances in the 2-week forecast.  Do not be mistaken – we are in a “weather market” where positions will change along with the forecasts.

Outside of weather, it has been the funds who have helped propel the move higher over the past year – naturally, when funds liquidate their large long position, you get a gut punch like we’ve seen this week.

With unknown weather, a potential recession looming, and fund profit taking the current market condition are flat out tough to speculate on and require the utmost discipline and focus on profit margin management.

The Planted Acreage and Quarterly Stocks report comes out next week followed by a 3-day weekend for the 4th of July.

Give us a call today to get your plan set for tomorrow (i.e next week!) 312-858-4049.

Via Barchart

Soybeans suffered like corn from the cooler forecast and long liquidation this week. Collapsing world veg oil prices added pressure with the forecast change. Chinese Covid lockdowns and continued political friction will be in and out of the news but will always spook the markets. Beans and corn will be weather sensitive going forward but have suffered from outside forces like potential recession and lockdowns as well. The planted acres and stocks report will be important next week as well as weather over the 3 day 4th of July weekend.

Via Barchart

Wheat suffered along with other commodities with indications that Ukraine may be able to export more wheat than originally expected (not sure if this will come to fruition as the destruction of ports and shipping paths is continuing). Russian production estimates have risen, adding to the questions about what will be produced in Russia and Ukraine to be exported. The losses in wheat in recent weeks is confusing as the US yields are not spectacular, war continuing in Ukraine, and India is still in a drought, none of these are bearish factors yet we have come well off the highs.

Via Barchart

Equity Markets

It has been a bad past couple weeks for the equity markets as they fell lower following the Fed raising rates 75 points and lots of debate of a recession in the future. While the Fed tries to make up for late moves and inflation continues to affect the country it is important to look what has gotten us here. As companies are likely to lower future earnings expectations, it will be important for markets to figure out fair value after the last 2 years of staggering valuations.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

There is an agriculture tug of war happening across the nation, impacting America’s farmland. Fertilizer prices are continuously fluctuating, and it has us taking a page the “The Clash” should we stay, or should we go?! And we aren’t the only ones. Many farmers are asking their agronomist and chemical salespeople, “what will fertilizer cost me the rest of the season, and what are my options if I don’t want to go all-in on my typical fertilizer treatment plan?”

In this episode of the Hedged Edge, we are joined by a special guest who needs no introduction in his local circle, Dick Stiltz. Dick is a 50-year veteran of the fertilizer and chemical industry and is the current Agronomy Marketing Manager of Procurement fertilizer and crop protection at Prairieland FS, Inc in Jacksonville, IL. He is at the pulse of the current struggle and here to discuss the topic at hand.

 

 

Via Barchart.com

 

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.

 

10 Jun 2022

AG MARKET UPDATE: JUNE 2 – 10

Corn had a good week with solid gains as there has still been no conclusive progress on an open trade corridor for Ukraine to export grain. The US weather outlook for late June remains hot and dry for many areas. While this is not too worrisome yet, if that pattern continues for the summer it could lead to the long-term weather problems the world supply does not need. The cash market remains hot with positive basis for corn pushing corn up over $8 in many areas in the corn belt. The USDA Report Friday did not include many surprises but had a reduction in old crop corn exports. This led to a rise in expected ending stocks for 22/23 to 1.400 billion bushels for the US. World supplies were risen as well on a bigger Ukraine crop expected (up 5.5 mmt from the May estimate).

Via Barchart

Soybeans had a good week with strong exports and higher bean oil prices. While there has not been much soybean specific news, the same supportive factors of the last few weeks remain. The high-pressure ridge that may move into the Midwest is providing support, like for corn, but whether that ends up happening will be a wait and see. The high crude prices will continue to help, and they may stick around for the summer as demand picks up. In Friday’s USDA report, Soybeans ending stocks were lowered to 280 million bushels for 22/23 for the US. World ending stocks were raised to 100.46 million tonnes, slightly higher than May.

Via Barchart

Equity Markets

The equity markets had been trading sideways for the last couple weeks but took it on the chin Thursday and Friday. While the market tries to pick a direction to go, the inflation number on Friday did not help as it rose to 8.6%. Markets tumbled on Thursday as the ECB said it would end asset purchases and begin to raise interest rates, pushing global bond yields higher. Hopes were that inflation had peaked, that was not the case, and the market reacted as expected to a 8.6% inflation number and record low consumer sentiment.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

There is an agriculture tug of war happening across the nation, impacting America’s farmland. Fertilizer prices are continuously fluctuating, and it has us taking a page the “The Clash” should we stay, or should we go?! And we aren’t the only ones. Many farmers are asking their agronomist and chemical salespeople, “what will fertilizer cost me the rest of the season, and what are my options if I don’t want to go all-in on my typical fertilizer treatment plan?”

In this episode of the Hedged Edge, we are joined by a special guest who needs no introduction in his local circle, Dick Stiltz. Dick is a 50-year veteran of the fertilizer and chemical industry and is the current Agronomy Marketing Manager of Procurement fertilizer and crop protection at Prairieland FS, Inc in Jacksonville, IL. He is at the pulse of the current struggle and here to discuss the topic at hand.

 

Via Barchart.com

 

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.

 

03 Jun 2022

AG MARKET UPDATE: MAY 26 – JUNE 2

Corn had another tough week with a couple big down days before a quiet day on Thursday. The big news this week was the rumors of talks between Russia and Turkey to discuss a safe trade passage for Ukraine to export grain. While this would be a positive for the world supply, rumors are rumors until something comes to fruition and Russia supposedly would only let that happen if they were to get economic sanctions lifted. Along with this news, corn planting was 86% complete at the start of the week following the long weekend after a few weeks of much needed catch up after the slow start. This is close to the average as parts of North Dakota and Minnesota remain slow due to weather. Eyes will now turn to the weather for this summer while keeping an eye on any further Russia and Ukraine developments.

Via Barchart

Soybeans have not seen the move down that corn and wheat have the last couple of weeks. Demand for beans remains high across many areas with meal and oil prices moving higher too. 908 million pounds of soybean oil were used to make biofuels in March, the second highest monthly total on record. Exports remain good and with July trading at a 70-cent premium to August the demand has been strong and could be interesting to see if purchases begin for coming months. Soybean planting was 66% complete to start the week, right on the average for this time of year.

Via Barchart

Wheat fell this week on similar news to corn with the rumors of Ukraine being able to export grain. With Ukraine growing more wheat than expected, this will help the world supply if they are able to export some of it. Spring wheat planting was 73% complete to start the week, while this is well below the average the progress made was much needed. Wheat will keep an eye on planting to finish up in areas that dry out and keep an eye on Russia and Turkey discussions.

Via Barchart

Equity Markets

The equity markets have had a good past few days continuing its move higher from the lows from a few weeks ago. The weaker than expected economic data may ease inflation and possibly keep the Fed from being too aggressive in tightening. While the Fed was slow to move on rates the debate about how fast they need to move higher from here continues.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

There is an agriculture tug of war happening across the nation, impacting America’s farmland. Fertilizer prices are continuously fluctuating, and it has us taking a page the “The Clash” should we stay, or should we go?! And we aren’t the only ones. Many farmers are asking their agronomist and chemical salespeople, “what will fertilizer cost me the rest of the season, and what are my options if I don’t want to go all-in on my typical fertilizer treatment plan?”

In this episode of the Hedged Edge, we are joined by a special guest who needs no introduction in his local circle, Dick Stiltz. Dick is a 50-year veteran of the fertilizer and chemical industry and is the current Agronomy Marketing Manager of Procurement fertilizer and crop protection at Prairieland FS, Inc in Jacksonville, IL. He is at the pulse of the current struggle and here to discuss the topic at hand.

 

 

Via Barchart.com

 

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.