RCM Ag Services

Category: Research

23 Apr 2021
Agriculture, Corn, Cotton, Dow Jones, Grain, Lumber, Market Commentary, Market Updates, Research, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

Ag Markets Update: April 17 – 23

Off to the races? Corn was limit up Thursday as prices for May corn topped $6.50 for the first time since 2013 continuing its impressive weekly run. The May option expiration occurring Friday has traders scrambling to cover short call option positions by buying futures and positioning themselves for next week’s first notice day. As we have been seeing in the cash market for a while with improving basis, it seems the futures market is catching up and realizing the market needs corn and it needs it now. Any farmers with old crop remaining has the cards in their hands looking to get prices high enough for them to make any sales. The cold weather/snow across much of the country this week is not expected to cause many issues except delaying planting a little longer in some areas as we wait for soil temperatures to get back up. Brazil’s dry outlook has not changed and will continue to put stress on a crop that does not need anymore problems. Continue to monitor the dryness in South America as problems there will transition to gains in our new crop markets as the world will need the US to produce a large crop.

Via Barchart

 

Soybeans gained on the week as they followed corn for similar reasons. The South American weather issues will not effect the soybean market like corn but as we have seen good news for one has been good news for the other. The may option expiration came into play as beans saw a strong rise on Thursday even though they were not limit up. Exports this week were nothing to write home about but still within expectations and well ahead of the pace needed to meet USDA estimates. With world demand high, the US needs to have a great crop to meet it and not cause issues in the world pipeline. As volume begins to pick up in the November contract it will be important to have a plan for marketing your crop this year as volatility is always around.

Via Barchart

 

Cotton did not enjoy the rally the grains had this week as they continue to trail the other markets in price competitiveness. Weekly exports are expected to decline going forward, not from a lack of demand, but from a lack of supply left in the US, which should be seen as bullish despite lower export numbers appearing bearish. The big head scratcher is why cotton prices are lagging the grain market so much when prices need to be competitive just to get all the acres in the ground. With corn and soybeans taking their next leg up this week, December cotton equivalent price should be about $1.11 vs. the current $.84. What is needed to get to this level? We could see what is currently playing out in the grain markets on option expiration causing a big boost when the next one comes up, but cotton needs a boost to get it all in the ground.

Via Barchart

 

Dow Jones

The Dow had been trading fairly evenly on the week with some down and up days until Thursday’s losses following the Biden administration stating their plans to increase the capital gains tax to over 40% for high earners. A number that high will face headwinds from the house and senate and is unlikely to come to fruition but the Biden administration did campaign on raising those and a raise should be expected.

Lumber

Check out our recent post about the lumber market and what all has been going on.

 

US Drought Monitor

The map below shows what areas are currently experiencing drought conditions across the US. Not much changed from last week.

 

Weekly Prices

Via Barchart.com

 

01 Apr 2021
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Research, Soybeans, Weekly Prices, Wheat rcmagserv 0 comment

Ag Market Updates: March 27 – April 1

Watch our corn and grain experts talk through this new report in our podcast The Hedged Edge. Or you can continue on below and read our analysis on the corn, soybean, and wheat markets.

 

 

The USDA coming out with a bullish report? 2021 is due to have some crazy things happen after how 2020 went. The Prospective Plantings Report that came out this week pegged the US corn crop at 91.144 million acres when the average trade estimate was 93.208 million acres. The USDA lowered their numbers from the USDA Ag Forum earlier in the year that projected 92 million acres. Along with the acreage coming in below expectations, the Stocks report was lowered from the March 1 number of 7.952 billion bushels to 7.701 billion. So, what does all this mean? It means that an already tight world supply has to meet the needs of a world coming out of a year of lockdowns where demand is expected to ramp back up to pre-pandemic levels. The US crop is always important in the world supply but any major weather issues in the US with this acreage could cause major issues in the world supply while also boosting prices. These numbers could still change as farmers can always decide to plant more but until the summer report of actual acres planted these will be the numbers to go off of.

Via Barchart

 

Soybeans, like corn, had a bullish report with prospective plantings coming in at 87.600 million acres. The average trade estimate was 89.996 million acres and the USDA Ag Forum had estimated it at 90 million acres. This led to a limit-up day following the report as the demand for beans is expected to continue to be strong as the world reopens and the US will need to meet that demand as South America did not blow their growing season out of the water. As we have continued to see the problems with ASF in China that is the current cloud still over this market even with the report. Even with the limit up move you can see in the chart below that it came after a long losing streak to get it back in the higher side of the range of the last 2 months. Thursday beans gave back a good chunk of their gains following the report as the market digests the report and all other information in the market right now. If this acreage number is accurate for the year and the crop isn’t trend line or better then prices should continue to be strong and go up from here. If there is a great growing season and the ASF outbreak in China gets out of control it could put some pressure on this market.

Via Barchart

 

The report for wheat came out bearish but was pulled up after the report by corn and beans. All wheat acres came in at 46.358 million acres when the average trade estimate had it at 44.971 million acres and the USDA Ag Forum had it at 45 million acres. Wheat appears to have taken some of the 1.4 million acres from corn and soybean estimates. The stocks came in above estimates to pushing more bearish news into the market. It will be interesting to see if this weekend’s freeze for the winter wheat areas changes some minds on abandoning acres. As you can see from the chart below wheat has had a more volatile run but is still much higher than it was over last summer despite the last few weeks of losses.

Via Barchart

 

Dow Jones

The Dow gained on the week as markets calm down following the spike in interest rates as their rise has slowed. President Biden rolled out his plan for over $2 trillion in infrastructure improvements this week and still has more spending plans to go. With the money that has been pumped into the economy through stimulus and reopening continuing in the US, there are many questions ahead but one thing we know is that Biden plans to raise taxes to help pay for these plans which will be important to pay attention to.

 

Weekly Prices

Via Barchart.com

 

 

12 Feb 2021
Agriculture, Corn, Cotton, Crop Insurance, Dow Jones, Market Commentary, Market Updates, Research, Soybeans, Weekly Prices, Wheat rcmagserv 0 comment

Ag Market Updates: February 6 – 12

Corn lost on the week following dissapointing numbers in the February USDA WASDE Report. Despite the big losses on Tuesday and Wednesday following the report a modest bounce was seen Thursday to give the bulls a little sigh of relief. As we have seen with previous dips there has been buying after the dips that help support the market. The big surprise in the report was US corn ending stocks number being over 100 million bushels higher than trade expectations at 1.502 billion bushels. They did lower them from the January report of 1.552 BBU but not near as much as expected. The world carryout was was also bearish with the USDA raising world carryout to 286.53 million metric tonnes, a raise of 2.7 mmt, and well above trade estimates. The bullish news was that Chinese imoprt expectations increased by 256 million bushels but the US export total was only increased 50 million bushels. With this bearish news funds also began to offload some of their long positions adding fuel to the fire. You should also not expect any news to come out of China as they head into their Lunar New Year so buying from China will be slow. Parts of Argentina that have gotten needed rain may have received more help than expected on their crops as some predict it helped more than anticipated. The positive day on Thursday to stop the bleeding was important for the bulls but how the week ends will be important.


Via Barchart.com

 

Soybeans were lower this week as the bearish news in the report for corn moved triggered a broad based sell off at the Board of Trade. Beans took it on the chin Wednesday as fund selling led the way. Despite a neutral report on the beans side, when funds decide to take profit they are the market mover. New export offers from Brazil were part of drawback as they were 40 cents below the US market and that collapse brought the US to about even. The USDA report showed that the US cannot export any more than about 250 million bushels the rest of the marketing year before bins are empty. CONAB released supportive bean crop estimates on Thursday coming in just above 133 million metric tonnes. The tightness of world stocks is on every traders mind and likely what has caused the markets to jump around – While 100 million additional bushels is only 1% of the 10 billion bushels produced any and all changes to production are being watched. The volatility of the past few weeks is best displayed on the visual daily ranges in the chart below.


Via Barchart.com

 

Cotton once again saw a big week of gains as demand around the world continues. Exports were strong this week with Vietnam, Turkey and China being the biggest buyers. The National Cotton Council’s planted acreage estimates came out this week with the following:

The NCC sees Upland acreage down 4.9% Y-O-Y, at 11.3mm acres. Pima acreage is seen down 20.7%, to 161,000. Overall, this imputes a 5.2% decline to 11.5mm acres. (CottonGrower.com)

With only 4 trading days next week, On-Call sales basis the March contract, will have to be fixed (bought) by the Mills before Friday, ahead of First Notice Day on Monday, Feb 22. The loss of acres was expected with soybeans and corn being very attractive in price vs cotton currently. If cotton can continue its run up it may be able to gain some acres back but this recent run will need to continue. West Texas continues to be extremely dry and will need some moisture heading into the spring.

Via Barchart.com

 

Dow Jones
The Dow gained this week as supportive news from vaccines and the continued drop in Covid cases around the US. As many investors remain bullish looking at 2021 it is important to note that we still have a long way to get out of the storm that has been the last year.

Wheat
Wheat has been in a sideways trade the last few weeks and looks to continue. There was no big news in the report that caused any knee jerk reaction in the market as it followed beans and corn lower on the week.

Insurance
Remember that this month is important for revenue-based insurance averages so it will be important to keep an eye on the markets even if you do not plan on making any sales. As of the close on 2/11 the price for corn is $4.5141 and soybeans are $11.645.


Via Barchart.com

21 Jan 2021
Agriculture, Corn, Cotton, Livestock, Market Commentary, Market Updates, Meats, Podcast, Research, Soybeans, USDA Report rcmagserv 0 comment

Ag Markets Update: January USDA Report

In this monthly segment on The Hedged Edge, RCM Ag Services pros Jody Lawrence, Ron Lawson, Kevin Bost, and host Jeff Eizenberg come together to provide expert knowledge on important markets including cotton, meat, and grains following the USDA Report. Watch the whole episode below!

 

If you’d rather listen – click on the links below to find your preferred platform:

04 Dec 2020
Agriculture, Meats, Podcast, Research, Risk Management rcmagserv 0 comment

Risk Management, Research Writing, and International Protein with Simon Quilty

International meat trade (including Kangaroo!), years of writing and thousands of subscribers, risk management consulting and more – today’s guest really is a jack of all (ag) trades. Simon Quilty, global meat trader and analyst with Global Agritrends is on today’s podcast to take a deeper dive into his risk management background (with tips for operations of all sizes), the background on how he became one of the world’s leading researchers on international protein markets, and more crazy stories that fit his entertaining personality.

Follow along with Simon at the Global Agritrends website.

From the episode: Man punches a kangaroo in the face to rescue his dog

Chapters:

00:00-01:13 = Intro

01:13-11:53 = World Traveler, Lobbyist / From trading the physical to exploring China’s economy

11:54-36:36 = Potential for Ag Markets / China’s 2 speed economy & Hog pressure concerns

36:37-43:10 = Favorites

 

Find the full episodes here:

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Disclaimer

RCM Ag Services is a registered DBA of Reliance Capital Markets II LLC. Trading futures, options on futures, and retail off-exchange foreign currency transactions are complex and involve substantial risk of loss and are not suitable for all investors. Loss-limiting strategies such as stop loss orders may not be effective because market conditions or technological issues may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. There are no guarantees of profit. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. You may lose all or more than your initial investment. You should not rely on any of the information herein as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments. Opinions, market data and recommendations are subject to change without notice. Reliance Capital Markets II LLC shall not be held responsible for any actions taken based on this website or attached links. Parties acting on this electronic communication are responsible for their own actions. Past performance is not necessarily indicative of future results.