Category: Research

30 Dec 2021

AG MARKET UPDATE: DECEMBER 22 – 29

Corn continued its rally until it faced some selling on Tuesday. The dip on Tuesday should be expected when a market starts running this hot and people like to take their profits. The South American weather has not changed and remains hot and dry in southern Brazil and Argentina. Northern Brazil may have the opposite problem as they are expected to see heavy rains that could lead to flooding delaying the start of harvest in the region. The weekly ethanol grind was good again this week as we are 17 mbu above the weekly pace needed to meet the USDA’s corn used for ethanol projection. As Americans continue to travel despite the new wave of Omicron, we can expect an increase in corn use in the January USDA update. The air has not been let out of the market, despite what “the sky is falling” people said after Tuesday’s dip, as there is still a lot that can happen in the coming weeks and months.

Via Barchart

Soybeans saw a big boost the first trading day after Christmas as the weekend weather did nothing the alleviate the concerns for South America’s production. Beans saw the same profit-taking on Tuesday but are still seeing its best levels since August. The same factors affecting corn in South America have the same effect on soybeans. With inflation looking to continue into 2022, we could see higher values in many commodities along with grains. Rising world vegetable oil prices have helped beans during their run along with wide crush margins. As we said last week, corn and beans seem to be on the same boat for now unless something significant happens. Any unexpected rain to help the crop would probably result in a panic selloff as usual.

Via Barchart

Dow Jones

The Dow had a good week as we have seen a good rally around Christmas and into the New Year’s holiday. The Omicron variant continues to rip through the U.S. and the world as events are canceled, and restrictions are placed back. With the rate of this new wave spreading, it will be interesting to see how long the rules stay if the virus runs its course faster than usual. The CDC changing the quarantine requirement from 10 to 5 days is also welcome news to the market as it appears we may be getting closer to fewer restrictions across the board and workers getting back quicker. At the close on Wednesday, the Dow is up over 19% for the year (wow!).

Podcast

The 2021 U.S. grain crop has the potential to be one of the largest on record. Where did all the yield come from, what areas were the hardest hit, and why on God’s green earth are grain prices still so high?

Today, we are joined by several RCM Ag Services grain markets experts from around the country to catch up on a post-harvest update and share an outlook for production and marketing in each of their respective regions for the remainder of the 2021 marketing season and the upcoming 22 crops.

 

 

Via Barchart.com

27 Dec 2021

What’s Driving the Grain Markets Heading into 2022?

The 2021 U.S. grain crop has the potential to be one of the largest on record. Where did all the yield come from, what areas were the hardest hit, and why on God’s green earth are grain prices still so high?
Today, we are joined by several RCM Ag Services grain markets experts from around the country to catch up on a post-harvest update and share an outlook for production and marketing in each of their respective regions for the remainder of the 2021 marketing season and the upcoming 22 crops.
Listen or watch:
23 Dec 2021

AG MARKET UPDATE: DECEMBER 9 – 22

Since early December, corn has had a great run as South America’s dryness continues and delays planting in some areas. The corn crop is only about 60% planted in Argentina, which is the slowest pace on record for late December. Anything planted after January 10th will probably experience some yield drag. Their planting rate is on par with last year, but the weather has been far dryer and looks to continue going forward. As you can see in the chart below, March corn has rallied 90+ cents since early September. With continued strong basis and raises at prices, farmers have been given a gift but when the farmers choose to claim the gift and how long the gift stays available is another question. If Argentina and Brazil stay dry, this rally could continue, and we could retest the summer’s highs. Ethanol margins shrunk, and crude fell but remain at much higher than average levels, which will also support corn.

Via Barchart

Soybeans, like corn, have enjoyed a nice rally as South American weather issues cause some worry.  This week, Brazil’s bean crop had its production estimate lowered by 3 million metric tons by Parana’s crop analysis firm, Deral. While Brazil is still on pace to produce a record crop, it is not expected to be as large. They increased planting this year, so a larger crop is expected in Brazil, even with some headwinds.  The basis is holding steady around the country for beans as we head into the new year. Beans and corn are likely to move together leading up to the January USDA report.

Via Barchart

Dow Jones

The Dow had a flat week and a half with volatility due to the Omicron variant having it all over the place with several large down days followed by a good bounce. The Omicron variant’s spread has been worrisome as restrictions start to come back into play in major cities. It will be important to keep an eye on this around the holidays as we also hope to see the “Santa Clause rally.” Senator Manchin also stopped President Biden’s BBB plan as he will not vote to approve it in its current form.

Podcast

Commodity prices have perpetually soared for the past year and continue to trend higher. We’re diving into the fertilizer forecast with a unique guest, Billy Dale Strader, a branch manager for Helena Agri-Enterprises in Russellville, KY., who is truly at the epicenter of the rising fertilizer prices.

Billy Dale planted his agriculture roots on his family-owned farm and has managed regional seed and chemical sales at Helena for the past decade. In this week’s pod, we tackle the big question for farmers and ultimately end-users — is the impact of higher-priced inputs, like seeds, chemicals, and fertilizer, on the supply and demand for the major U.S. crops? Listen or watch to find out!

 

 

Via Barchart.com

11 Nov 2021

AG MARKET UPDATE: OCTOBER 28 – NOVEMBER 9 USDA REPORT

Corn was struggling this week heading into the Nov 9th USDA report, where it saw a good bounce after its release before falling back to only finish up slightly higher on the day. The corn numbers that came out of the report were fairly neutral, with a 177 bu/acre yield and 15.062-billion-bushel U.S. production. The yield was slightly raised from 176.5 the month before but was right in line with estimates, so there was no significant reaction on that number. Overall, there were not many surprises for corn as most bullish reactions came from soybeans pulling them higher with them. With ethanol margins very profitable and crude oil staying higher, the demand side will continue to keep basis levels high. As harvest was 84% complete at the start of the week, there is still time for any weather issues to create issues to finish up harvest, but this is always expected, so being this far along is helpful.

Via Barchart

Soybeans had an excellent bounce post USDA report but finished well off the highs of the day. The yield came in at 51.2 bu/acre, down 0.3 from last month, along with lower world-ending stocks. As far as U.S. ending stocks. the USDA pegged it at a manageable 340 million bushels, slightly up from last month —these numbers are not outright bullish. South America’s weather is non-threatening right now; however, with solid world crush margins, there is not much reason for a bearish outlook heading into the winter. With funds currently flat, we may hang around this area trading until new news enters the market.

Via Barchart

There were no surprises in the wheat report,, but it did follow beans higher after a down week leading into the report. US wheat stocks came in at 583 million bushels (pre-report estimates were 581 million) and world-ending stocks of 275.80 million metric tons (pre-report estimates 276.5 MMT). Despite the recent pullback, there is still a bullish sentiment in the market moving forward for the time being.

Via Barchart

Dow Jones

The Dow has continued to trend higher this week as it has put together an impressive month despite Tuesday’s pullback. Many markets have led it higher from tech to industrials, with the new infrastructure bill playing a role.

Side note: The crypto markets have also been on a tear the past couple of weeks. It will be interesting to watch heading into the end of the year after an impressive last year and a half.

Podcast

For the past year, commodity prices have perpetually soared and continue to trend higher. We’re diving into the fertilizer forecast with a unique guest, Billy Dale Strader, a branch manager for Helena Agri-Enterprises in Russellville, KY., who is truly at the epicenter of the rising fertilizer prices.

Billy Dale planted his agriculture roots on his family-owned farm and has managed regional seed and chemical sales at Helena for the past decade. In this week’s pod, we tackle the big question for farmers and ultimately end-users — is the impact of higher-priced inputs, like seeds, chemicals, and fertilizer, on the supply and demand for the major U.S. crops? Listen or watch to find out!

 

U.S. Drought Monitor

The maps below show the U.S. drought monitor and the comparison to it from a week ago. The outlined areas in black are areas that the drought will have a dominant impact.

Via Barchart.com

01 Oct 2021

AG MARKET UPDATE: SEPTEMBER 23 – 30

Corn took it on the chin upon the release of Thursday’s USDA report before bouncing back to finish only slightly lower on the day, but still up on the week. The report may have left more questions than answers hanging around as they raised ending stocks, but as we mentioned last week, the current basis and cash markets hint there may be less corn out there than the USDA believes. Corn stocks came in at 1.236 billion bushels, which was higher than the average estimate going in. Harvest was 18% done at the start of the week, and further progress will have been made with favorable harvest conditions. Exports this week were not great for corn, while beans were strong. The next major report for corn will be the October 12th yield update. With harvest getting off to a fast start, it will be interesting to see if the private estimates and USDA are closer to each other than usual this far in.

Via Barchart                         

Soybeans fell post report as estimates were well lower than the USDA number of 256 million bushels. The average estimate was 174 million bushels which caused the immediate and lasting drop following the report. Obviously, nobody saw this number coming as it was well higher than the highest estimates. It is now time for the market to decide if they believe that number leading up to the October 12th yield report. Beans had great exports this week, but that was not enough to fend off the bears with the report. All the losses for beans on the week came from the report, as it had been pretty flat until Thursday. Soybeans harvested at 16% and will continue like corn this week. Like corn, the October 12th yield update will be critical as harvest has progressed further and we have a better idea of the crop.

Via Barchart

Cotton has been on a great run the last two weeks as you can see in the chart below. Cotton busted through several technical indicators in the 97 cent range while also clearing the 99.47 high from January of 2012. China has started to inquire about purchasing cotton as many companies look to import cotton and no longer use cotton from Xinjiang. Ultimately this is a supply/demand driven rally from strong global demand and uncertainty about the crop until it is out of the ground. Forecasts for rains in West Texas this weekend are not helpful for the crop and could cause issues depending on how much it does rain. Even with further upside potential to the cotton price this is a good opportunity to set floors to take advantage of this run up. As always look at your production and make the informed decision that applies specifically to your operation and not a cookie cutter plan.

Note: Since the writing above, Cotton has now topped 105 with December 2021 Cotton touching 107.28 on what seems to be a made rush of continued buying…. hold on to your hats!

Via Barchart

Wheat

Wheat saw a post-report rally as all wheat stocks came in at 1.780 billion bushels, which was below the pre-report estimates. Keep an eye on Russia as the export tax on Russian wheat will cut acres from their regular planting and could play out in the US wheat market as well.

Dow Jones

The Dow struggled again this week as September proved to be the worst month for stocks since March 2020, when Covid hit. Rising treasuries and interest rate hikes in the future had some to do with it, but September historically is not a great month for performance. One bad month in the span of a year and a half should not ring the alarm, but it will remind everyone that stocks can go down.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence, along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of agriculture markets. They discuss the real-world application of short-dated options to potentially fight the recent blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the US drought monitor and the comparison to it from a week ago. The outlined areas in black are areas that the drought will have a dominant impact.

Via Barchart.com

 

 

17 Sep 2021

AG MARKET UPDATE: SEPTEMBER 2 – 16

Corn was struggling heading into the USDA report last week but has seen a good 30+ cent bounce from the sub $5.00 lows. The USDA raised their expected yield for corn to 176.3 bu/acre and added 600,000 acres. They also raised the ending stocks with higher yield for what some would consider a bearish report, but the reaction was neutral to bullish following it. As harvest gets going, yield estimates cover a wide range, but it appears that a mid 170s is more and more likely. With no significant weather concerns in the coming weeks, harvest should get off to a fast start. As strong as prices currently are, it is always essential to have a marketing strategy to avoid missing out on other opportunities. As you debate how much to store in the bins or go ahead and sell, make sure it is what makes the most sense for your farm. If you want to sell now to get the cash, consider what can be done on paper to not miss out in case of higher prices in the future. As harvest gets rolling expect yield updates to change as well while the markets keep an eye on them.

Via Barchart

Soybeans have had a similar reaction the past couple of weeks as corn. The USDA slightly raised their bean yield to 50.6 bu/acre from 50 and lowered harvested acres by 300,000. China continues to show up in the export report which is both needed and welcome to see after this summer’s lack.. As the ports in New Orleans and the other grain terminals along the Mississippi River reopen following the hurricane, export disruption worry has slowed. Harvest (like corn) should get off to a great start in the coming weeks, and it is crucial to have your marketing plan ready and execute it. Keep an eye on yield reports as they come out in the weeks ahead and the cash market as it will help give an idea of how much people are willing to sell now or store.

Via Barchart

Dow Jones

The Dow has struggled so far in September like the other indexes. This is not uncommon to see this time of the year but does give investors heartburn when you see back-to-back weeks of struggles.

Wheat

The insurance price was set for the red wheat varieties yesterday at $7.16 and $7.08, a multi-year high.  High prices cure high prices so expect corn to lose acres in the Wheat Belt as the guarantees will motivate additional wheat acres.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence, along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of agriculture markets. They discuss the real-world application of short-dated options to fight the recent blaze of volatility surrounding agriculture markets potentially. https://rcmagservices.com/the-hedged-edge/

 

US Drought Monitor

The maps below show the US drought monitor and the comparison to it from a week ago. The dryness will allow harvest to start on time.

 

Via Barchart.com

 

 

20 Aug 2021

AG MARKET UPDATE: AUGUST 12-19

Corn fell on the week tied to better than expected rain totals and uninspiring demand news. Weather over this weekend is expected to provide relief in some areas before normal late summer weather returns to much of the corn belt. Exports were good but lagging this week and as we have seen recently we need consistent and strong buying, not just good. Thursday’s strong downturn was commodity wide as all grains and energies struggled. The western corn belt is expected to get rain this weekend – it needs it – as you can see in the drought monitor below. We are still within the pre-report trading range so how the market trades on Friday and rainfall over the weekend will be the market movers the next couple of trading days.

Via Barchart                          Soybeans, like corn, fell on the week lead by the losses on Thursday. Bean oil and meal also struggled over the last few days as world demand remains in question going forward. The rains expected over this weekend should help the bean crop more so than corn in those areas so the actual rainfall received will be important come Sunday night. Like corn, exports were good but not great and we NEED great to get people excited. If we see China buying new crop beans (or corn) in the coming weeks that would be welcome support for the market that is needing direction. The Biden administration has yet to make up their mind on what they want to do with biofuel mandates presenting the markets with a big question mark that they must work with for now.

Via Barchart

Dow Jones

The Dow lost on the week as markets try to solve the mystery of the Fed and their tapering while also worried about the Delta variant. The consumer demand report and weakness in China consumer demand are hanging over the markets with a possible correction on the way according to some analysts.

US Dollar

The US Dollar hit a 10 month high adding to the bearish reaction across all commodities this week. A weaker USD helps US commodities be more competitive, but we are still a long way from where we were pre-pandemic.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the current drought conditions with rains expected over much of the corn belt over the weekend. Last week’s is also there for comparison week over week.

Via Barchart.com

27 Jul 2021

Managing Today’s Market Risks through Short Dated Options with CME Group

It is no secret that commodity markets have been on fire over the past 12 months.   On today’s podcast we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real world application of the use of short dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

As the director of Research for RCM Jody is no stranger to the podcast.  Tim, is the Managing Director of Agriculture products for the CME Group and is responsible for management of the company’s global agriculture commodities business – including grain, oilseed, livestock and dairy risk management products.

 

Find the full episode links for The Hedged Edge below:

23 Jul 2021

AG MARKET UPDATE: JULY 15 – 22

Corn made small gains early in the week only to fall short heading into the weekend as weakness continues to creep into the market with poor exports continuing and weather uncertainty. The hottest temperatures of the year for the plains and western corn belt are expected in the next few days with the only relief possibly coming past the 7 day forecast. As bad as things seem in the western corn belt, the eastern corn belt is having great weather, but will it be enough to offset those loses?

Brazil’s crop continues to get smaller, despite the USDA not making any major outlook changes, as they experience more freezing temperatures on their corn crop. China continues to sit on the sideline with no big purchases as they wait for lower prices before buying US corn. We know they will need to make purchases at some point but as we have seen in the past when there is no news from China prices tend to dip until they make a purchase so they will be quiet waiting for the right time to buy.

Via Barchart                          Soybeans had a rough Thursday as the extended forecast offered a chance of help.  We have to remember that extended, is just that – it’s NOT tomorrow – and just as help was added it can go back to hot and dry in one weather report. You’ll note in the chart below that beans have been trading mostly sideways since the start of May. This will probably continue unless some unforeseen news hits the markets or a major weather event/change in forecast happens. The next major report is the August 12th report which could be what finally gets us out of the range (whether to the upside or downside is TBD).

The bean oil market has added volatility to beans as well as the Biden administration’s silence on their direction for the bio fuel industry.  Their lack of action, one way or the other, is hurting beans and bean oil as producers remain with unanswered questions which leads to uneasiness (read volatility).

Via Barchart

Dow Jones

The Dow lost on the week (Thursday-Thursday) following a large selloff on Monday followed by 3 straight days of gains. The market was trading positively into the week’s end as well getting back over 35,000 in intraday. The Delta variant worries seem to be biggest fear in the market right now as it spread dangerously throughout under vaccinated areas of the country threatening the continued reopening.

Podcast

Check out our recent podcast with Dr. Greg Willoughby: We’re talking with Greg in the new episode about being a “plant doctor”, weather patterns, GMO & organic produce, crop history, technical advances, level 201 education on agronomy, the agronomy equation, Helena Agri, soil biology, American v European agriculture, Greg’s early background in livestock, and the advancement of native plants to modern produce.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the current drought conditions in the US. The second map is last week’s so you can see how the areas that received rain improved or did not. The wild fires continue to rage in the west as smoke from them has carried all the way to Southeastern US.

Via Barchart.com

09 Jul 2021

AG MARKET UPDATE: JULY 1-8

The corn market fell thanks to the rain that was received in the Upper Midwest over the 4th of July weekend. As always when it rains in areas that need it the most, the market freaks out as if it is a crop making/saving rain. The reality is, although the rain was helpful, there are still significant drought conditions across most of the areas that received rain (see in the drought chart at the bottom). With this said, next week is forecasting rain across the western corn belt providing some more relief to those areas before returning to hot and dry after.

CONAB (Brazil’s USDA) updated their yield expectations this morning by cutting their corn crop by 3 million metric tons (120 million bushels). This change came before a freeze event they had recently which could lead to problems and another cut of their expected crop. The USDA will update their estimates of the South American crop next week in the report.

The weekly ethanol report was bullish as production was 2% ahead of pre-Covid 2019 levels. US drivers drove a record amount over the 4th of July weekend with indications that usage for the summer could be a new record. The USDA is expected to increase their estimates for corn used for ethanol coming up as their numbers are lagging the actual pace.

Via Barchart                        Soybeans, like corn, fell following the holiday weekend with huge losses on Tuesday to start the week. Weather remains the main focus of the markets as rains in the next week will help but forecasts have it followed by heat and dryness. Bean crop conditions this week were down 1% to 59% g/e. The soybean balance sheet does not have as much room for error as corn so any adverse soybean news will be bullish for the market. The long term up trend broke about 3 weeks ago but prices are still at a great level compared to what we were seeing this time last year. The report on Monday will help tell us what other news should be moving the market other than weather but headlines love to say it rained.

Via Barchart

Dow Jones

The Dow lost on the week after a tough Thursday in the markets. The market bounced back well off its lows on Thursday into the close however to keep some momentum. The markets have been volatile, but the big picture is important as we have traded in the range above 34,000 for most of the last 2 months. The delta variant has had many people worried and keeping an eye on the market for any indicator of how bad it could end up being for continued reopening around the world.

Lumber

Lumber prices have flattened out the last couple weeks after losing over half its value from the peak. Markets are hinting at this being the beginning of a rebalancing as the producers and suppliers feel out the supply and demand story.

Podcast

Check out our recent podcast with Dr. Greg Willoughby: We’re talking with Greg in the new episode about being a “plant doctor”, weather patterns, GMO & organic produce, crop history, technical advances, level 201 education on agronomy, the agronomy equation, Helena Agri, soil biology, American v European agriculture, Greg’s early background in livestock, and the advancement of native plants to modern produce.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The maps below show the current US drought conditions this week vs last week. As you can see the rain that freaked out some in the markets did not exactly fix the drought problems. The rain was helpful but will need more consistent sustained rain to help the crop in the coming months.

Via Barchart.com