RCM Ag Services

Category: Soybeans

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

HARVEST MARKET UPDATES: JANUARY 16-22

Corn was pretty flat on the week dropping only 1 cent in the March contract. As the weather in South America had no surprises and exports continued at a good pace there was not much to move the market overall despite a couple volatile days mixed in there. The underlying fundamentals did not change and the swings were brought on moslty from the managed money side. There was some rain over last week and some added to Argentina looking out a couple weeks but as we know weather that far out is hard to predict. IHS Markit updated their projected acres for 2021 to 94.2 million which is 3.4 million above the 2020 acreage. This would definitely be bearish new crop corn (Dec ’21) prices but there is a long way to go to be able to actually plant that many acres. After corn’s run up it is hard to tell if this week was a needed pause to asses where we are or a top. If you have not thought about marketing your ’21 crop yet we highly suggest coming up with a plan now as this run up in prices may not last forever and you do not want to miss out on profitable selling opportunities (see where we were this time in 2020 vs where we were May-Aug). The pullback may continue as funds begin offloading contracts but exports this week were strong so the fundamentals remain supportive.


Via Barchart

 

Soybeans took it on the chin this week for their first sizeable pullback since early December. The underlying fundamentals, like corn, have not changed in the last week. Most of the pullback came from follow through selling by speculative funds. The loses were greater this week before bouncing back as the intraday low on Wednesday was $13.52. IHS Markit projected US soybean acreage for 2021 to be 90.1 million which would be 7 million more than 2020. This is a bearish number if it is realized but is also not surprising when bean prices right now make them very attractive. Brazil’s crop keeps shrinking but they also planted the most acres ever this year, so they are still on track for a near record crop. Everyone will keep a close eye on South American production as the influence on our prices continues. If you still have beans and have not sold during the rally thinking they are going higher we suggest selling the physical and consider a re-ownership on paper strategy if you want to be long. Prices kept falling on Friday as funds continue to liquidate despite strong exports. When funds are as long as they have been we expected them to take profit at some point but it will need to slow down for the bullish fundamental news to direct the market again.


Via Barchart

 

Cotton had a solid boost this week as the bullish trend keeps on rolling. A weak dollar, as mentioned before, has been very supportive of commodities in general but especially cotton. As demand around the world ramps back up cotton has benefited from international demand, from countries like China, as they are coming out of the pandemic. With this world demand there are shipping concerns as Covid continues to be a problem in the US as ports struggle to contain breakouts. Ultimately when there are bottlenecks in the supply chain it frustrates everyone but will pinch balance sheets for end users when they pay more to get the cotton delivered.


Via Barchart

 

Dow Jones
The Dow gained on the week with Joe Biden’s inauguration coming and going without incident. As investors start to get a better idea of what the Biden administration will look like and what they look to do with regulation and taxes the next month will be important for investors. Most analysts are bullish looking at 2021 as vaccine distribution continues to roll out and we begin to look at the world after lockdowns from Covid are no longer needed. One thing that Biden has made apparent is he wants to switch towards cleaner energy throughout the country and already halted the Keystone Pipeline construction on day 1.

USDA Report

The RCM Ag team had a roundtable discussion following last week’s USDA report on our new podcast, The Hedged Edge. Here are the links to view/listen to it on your platform of choice.

 

Weekly Prices

Via Barchart

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:

15 Jan 2021
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, Wheat rcmagserv 0 comment

Harvest Market Updates: Jan 9 – 15

Corn had a huge boost this week as the USDA reported the US yield to be 172 bu/acre. This was a 3.8 bu/acre decrease from the Nov report that nobody was expecting. The average trade estimate heading into the report was 175.3 bu/acre, so this surprise played a large role in why corn was limit up following the report. This number is low when you think about the past several years of yields and the fact the USDA had estimated the crop to be 181.8 bu/acre in the August report. Now we had some weather events that caused damage to large areas of crops and a drier August, but not to the point that would cause a 9.8 bushel decrease. So, the drastic change over the last few months is a head scratcher, but the USDA does usually leave us with more questions than answers. The USDA also lowered both US and World ending stocks showing why corn has been going up over the past few months, less corn in the world than expected. US ending stocks were lowered from 1.702 billion bushels to 1.552 billion and world ending stocks were lowered from 288.96 billion bushels to 283.83 billion. Tightening ending stocks played a major role in the harvest to now rally in corn and will continue to play a role as all eyes will turn to South America and their corn crop. If their crop begins to struggle or comes out smaller than anticipated this will begin to push new crop ’21 prices up as farmers make their decisions on what to grow in 2021.


Via Barchart

 

Soybeans continue to go higher as March beans topped $14 this week. Like corn, the report was bullish for soybeans. The USDA pegged yield at 50.2 bu/acre after dropping them ½ bu/acre from the December report. They also raised exports and use while cutting ending stocks adding to the bullish news. Soybean’s news the last few months has been bullish as South America oversold their last crop and are now importing US beans on top of the picked-up demand from China. The USDA also lowered the production for South America from 183 million metric tons to 180.6 MMT. With the current South America weather problems (dryness) this number could continue to go down which would keep the weather as one of the bullish factors pushing the market higher. With Chinese demand continuing along with the imports into South America until their harvest, we will continue to see demand support the market. As always with this time of year pay attention to South American production numbers/weather as changes in those will also have major impacts on our markets.

Via Barchart

 

Wheat followed corn up after the report this week as there were no major changes to wheat. The news from the report was that the winter wheat seedings report increased for the first time in 8 years. All wheat acres were 31.991 million acres, up 1.576 million from last year. This was also slightly higher than the trade estimate. The Dec stocks number was not much of a surprise as it came in at 1.674 billion bushels. On the supply and demand side, supply was left unchanged while seed usage was raised slightly by 1 million bushels and feed usage raised by 25 million. This lead to a 26 million bushel reduction in the ending stocks , overall friendly for the market. As you can see in the chart below, despite the Nov dip the March chart is still bullish looking back to the contract lows in June.

Via Barchart

 

Dow Jones
The Dow has remained pretty flat over the last week as impeachment of President Trump hasn’t been a market mover with president elect Biden set to take office in one week. As vaccine rollouts continue to be slower than hoped for, states begin to ramp up their next phase to non-healthcare workers. Governor Cuomo has now come out against another round of lockdowns but we will see what the Biden administration has in store in the next two weeks.

Weekly Prices

Via Barchart

08 Jan 2021
Agriculture, Corn, Cotton, Dow Jones, Market Commentary, Market Updates, Soybeans, U.S. Dollar, Weekly Prices rcmagserv 0 comment

Harvest Market Updates: January 2-8


Corn continues its run up and briefly traded over $5 this week. Corn and beans charts look very similar as you can see below as corn has followed beans. What I mean is bean news moves the markets more so than corn right now as exports for both to China (and others) have been steady for a while now with some surprises from time to time. China announced this week their intention to plant more corn acres this year and expand ethanol production, but with Chinese corn still at around $10 it will be hard for them to make any major waves quickly. With South American weather continuing to be dry in the big picture this should keep SA from producing a huge crop. Old crop corn prices are strong but new crop Dec ’21 continues to lag and will ultimately depend on the South American crop and planted acres before we see any big movement. Keep an eye on the Jan USDA report that comes out the 12th for any change in news.

Via Barchart


Soybeans have had a great last couple months as they continue to run up and get over $13.50. As South America continues their dry outlook into the summer in the southern hemisphere. Argentina has a really good chance for wide sweeping rain next week but returns to dry after that. As South American weather still looks to be problem it will continue to be supportive of beans. With good exports again this week and weather issues in SA the underlying fundamentals remain supportive. Brazil has now started importing soybeans from the US as well as China and will continue to do so until harvest. With this runup we still see down days and even sizeable downward movements, this usually will stem from profit taking until we see fundamentals change. With soybean prices where they are this will lead to farmers switching over some acres which will be an important talking point heading into the spring. We continue the view of selling all of your ’20 crop and not paying for storage to take advantage of these prices. If you do not want to miss out on any further movement higher we suggest at looking at re-ownership on board if it fits your risk level.

Via Barchart


Cotton has seen a nice bump higher as we have gotten into the 80s for several trading days. Cotton may benefit the most from the weaker dollar more so than grains. US cotton is still cheaper than cotton in China (even with cost of delivery) so this should keep the US product competitive and sought after. With the outlook of 2021 moving out of the pandemic with vaccines, demand will rise for all textiles but cotton mills will ramp back up in India and China the most. March cotton chart is below.

Via Barchart


Dow Jones
The Dow has gained over the last few weeks as investors have gotten a better look as to what the next 4 year will look like as both Georgia senate seats went to the Democrats. Many experts think that moderate Dems will be the most important over the next 4 years as they will not vote completely on party lines and prevent any drastic changes. However, it will be important to keep an eye on the markets as we get closer to the Biden administration taking over as investors look to avoid new taxes.

US Dollar
The dollar has continued to stay low and may head lower. This is supportive of US commodities in the world market and would help exports in the big picture.

Via Barchart.com

21 Dec 2020
Agriculture, Corn, Market Commentary, Market Updates, Soybeans, Weekly Prices rcmagserv 0 comment

Ag Market Updates: December 12 – 19

Corn followed beans up this week as exports continue to roll. China continues to be a buyer of US corn and continued La Nina weather in South America are helping pull prices up. Corn will continue to go as soybeans go (as usual) so any positive soybean news is also supportive for corn prices. There continues to be upside in the market as fundamentals continue to bullish with the downside being a change in weather for South America. Corn has been slow and steady and will continue to be with exports being the main news.

Via Barchart

 

Soybeans finally broke through the $12 mark this week as world demand continues to drive prices. China potentially switching bean cargoes from Brazil to the US on shipping delay concerns (Argentina port workers strike) were supportive news as well as continued South American weather concerns. Southern Brazil and Argentina look to be dry into the end of the year while the rest of Brazil will get enough rain to keep it steady. As exports continue to be strong and on the high end of expectations it does not look like bean demand is going anywhere. Bean sales have reached 90% of the annual USDA forecast with 8 ½ months left in the reporting year. Until South American harvest gets rolling US beans look to continue to benefit from the export demand. With the magic $12 threshold being past we could see this run continue.

Via Barchart

 

Dow Jones
The Dow gained on the week as vaccines rolled out across the country while the current COVID wave is seeing new records every day. Congress continues to negotiate a stimulus bill as the year comes to a close. Many investors see 2021 as ripe for growth and still think there is time to get in to take advantage of a post Covid-19 US even if you missed the run up to 30,000 from the March lows.

Crude Oil
Crude Oil has rallied back to pre-lockdown numbers this week as it got back to $49/barrel. As fuel consumption has slowly been growing a second round of lockdowns could lead to over supply problems if drilling is also not cut back.

US Dollar
The US dollar has continued to fall as it is again seeing value not seen sine early 2018. A low USD helps commodity prices and cotton more so than others as we have seen cotton’s recent run up.

Weekly Prices

Via Barchart

11 Dec 2020
Agriculture, Corn, Cotton, Dow Jones, Market Updates, Soybeans, Weekly Prices, Wheat rcmagserv 0 comment

Ag Markets Update: December 5 – 11

Corn was down a little on the week as there was not much news on either side. The USDA report came with a mixed bag of information as corn had minimal loses after it. The US corn stocks came in 11 MBU above estimates, but world numbers came in 12 MBU below making that news mostly a wash. They did not touch many numbers but did raise Chinese imports or corn by 16.5 mmt. Many experts still see 16.5 mmt on the lower end of imports and will probably end up being higher. Corn does not have quite the bullish news behind it of beans, but a sharp up move in beans will bring corn with it. Continue to keep an eye on exports to China and South American weather.

Via Barchart

The USDA report for soybeans came as a mixed bag of news. The US ending stocks came in higher than expected but still lower than the Nov report (190 MBU in Nov vs 175 MBU Thurs vs 168 mil bu expected). Thursday saw a wide range of trading from 18 higher to 8 lower as you can see in the chart below, and settled down a few cents post report. The main focus will now shift to world demand and South American weather as we head towards the end of 2020. In a La Nina year, drought conditions and warm temperatures can cause issues although recently SA weather has gotten some relief. Any surprise sales will be welcome news as well to push prices higher, but if South America has a production problem that will be the biggest market mover going forward until the January USDA report. Many experts are still bullish bean prices heading into 2021. We stand on our suggestion of not storing beans into the 2021 planting season to take advantage of great prices and potentially look at re-ownership strategies if it fits your risk profile as we look ahead to 2021.

Via Barchart

 

Cotton had a good week boosted on Thursday by the USDA report which provided some bullish news for cotton prices. It lowered production by 1.1 million bales (900,000 bales of which came from a reduction in Texas). Mill use was unchanged, but they raised exports 400,000 bales to 15 million as world consumption and US exports rise. Ending stocks were also 1.5 million bales lower to 5.7 million (or 33% of use). The USDA also lowered world ending stocks by 3.9 million bales expecting lower production and higher consumption. The 2.2 million bale decline in global production comes from the US reduction as well as 1 million bale reduction between India and Pakistan. China is also expected to import more cotton than the previous report. All of these are bullish news for cotton as well as continued drought conditions in west Texas that could cause problems come the spring if the conditions continue for too long. Another bullish factor looking to 2021 crop is with bean and corn prices where they are and cotton prices still trailing we could see acres used for cotton switch to beans or corn in areas where the soil allows. There is still a pandemic raging throughout the world with a second wave in full effect so consumption in the near future may be holding cotton prices back.

Via Barchart

 

Wheat had solid gains this week on Wednesday and Thursday after falling the previous trading days. The USDA report provided some bullish news with smaller supplies, higher exports, and lower ending stocks with no change to the domestic use. The 20/21 global wheat outlook is for larger supplies, increased consumption, higher exports, and reduced stocks. This probably comes on the heels of vaccines rolling out hopefully easing lockdowns as life gets back to normal throughout 2021.

Via Barchart

 

Dow Jones
The Dow has traded up and down over the last week making small gains as the market seems to have priced in the COVID vaccine being rolled out in the next week after FDA approval (hopefully) in the coming days. The approval of the vaccine and Operation Warp Speed going into effect could help support this runup of stocks into the new year, however, if Congress can’t get a stimulus bill together, we could see another pullback. There are still many questions about what a Biden presidency will look like for taxes and regulations coming to Wall Street at the start of 2021 as well.

Water Futures
The CME began trading water futures on Monday as yet another way for farmers to hedge their production if they use irrigation. Water will not require any physical delivery like other futures contracts. This will allow farmers to hedge against water scarcity or shortages that could hurt their crop. Read the entire article here.

Weekly Prices

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04 Dec 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, U.S. Dollar rcmagserv 0 comment

AG MARKETS UPDATE: NOVEMBER 21 – DECEMBER 4

Corn was unchanged over the last 2 weeks as it has been range bound between $4.20 and $4.40 as you can see in the chart below. This is the first stretch like this since corn began its climb up, as there hasn’t been any new news to really propel it. China continues to be the main buyer as we have come to expect, but with no surprise sales or weeks above expectations that hasn’t been enough to break through. The break followed by a bounce is good to see as markets remain bullish, but needed a correction along with the end of the December contracts in the last couple of weeks. Chinese demand of corn will continue to be the bullish news as we look for that to continue.


Via Barchart.com

 

As you can see from the chart below beans have had a couple decent size swings in the last two weeks despite only being down 10 cents over that time. In that span we have seen January soybeans touch $12.00 and dip to $11.43 before the recent bounce back. The good news is it appears that Chinese buying should help keep some support under soybeans as they will look to be aggressive buyers when price falls (like the recent 50 cent dip then bounce back). South America will get some rain across Brazil this week, but the La Nina pattern looks to bring hot and dry weather in the coming months during an important stretch. After the fall at the start of the week it is nice to see a bounce back to current levels showing there is still bullish support. With funds continuing to be near record long, when they decide to take profit we may see dips similar to this week. We continue to hold the same strategy of not storing beans into the new year and take advantage of strong prices while if you believe markets are going higher to look at ownership on the board.


Via Barchart.com

 

Dow Jones
The Dow has traded over 30,000 several times over the last 2 weeks, but has failed to hold onto that number for a longer run up. Positive vaccine news and the possibility of vaccinations starting this month were the main driver to get it to this point. Stimulus talks have resumed as well, with some sectors getting boosts from investors expecting targeted stimulus to certain sectors (airlines as an example).

US Dollar
The USD has continued its fall over the last couple of weeks. The 3-year chart below shows where the USD is relative to the past few years and shows that we are at levels not seen since early 2018. A weaker USD helps US commodities and makes them more competitive on the world market.


Via Barchart.com

 

Phase 1 Trade Deal
Just a quick note: Joe Biden said he will not immediately cancel the Phase 1 trade deal with China or take steps to remove tariffs currently in place.


Via Barchart.com

19 Nov 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: November 14 – 20

This week’s gains follow on the news from the USDA report from last week, as well as continued export sales. As we have seen from the last two pullbacks in the chart below, corn has bounced back and reached new contract highs this week. US corn is still cheap on the world stage so we should not struggle to find countries wanting to buy from us. Exports have slowed but are still consistent and strong, putting us in a much better position this year than we were this time last year. There was some pullback from the highs as there was profit taking from the funds even though they still are very long. Corn and beans have been moving very similarly as you can see from the two charts, and we expect this to continue as the underlying fundamentals moving the markets are the same with exports and South America weather.

 


Via Barchart

 

Soybeans saw another positive week as they move for similar reasons as corn. Beans traded up over $11.85 but have fallen back from those levels the past couple of days. Central Brazil’s weather remains good as planting was 67% complete and making progress. Southern Brazil and Argentina still have a dry outlook, despite getting more rain than expected this week. Looking forward to next week, we’re expecting some more strong rain, but the promise is still slightly too far out to be confident in. Exports continue their strong run as we expect them to into the new year. World bean, bean oil and other oils (palm oil, etc) all have very strong prices. With such a broad demand strength this is supportive for beans as well. The bulls have all the factors on their side from fundamental to technical which is why we have seen some crazy intraday ranges.


Via Barchart

 

Dow Jones
The Dow flirted with 30,000 this week but did not get over the hump and has since drawn. More positive Covid-19 vaccine news came out this week with another potentially 90% effective vaccine being announced for roll out. As Joe Biden begins filling seats in his cabinet-to-be, along with the senate race in Georgia, those will be the political market movers for the time being.

Via Barchart.com

13 Nov 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Market Update: November 7 – 13


Corn saw a big boost from the USDA report this week at they lowered yield expectations and export projections for the year. They lowered the expected yield from last months report from 178.4 to 175.8. The trade was expecting a lower number (trade expectation 177.7) but was very responsive to this. They also raised expected exports 325 million bushels to 2.65 billion bushels which would be a massive number. Most of the new demand they expect to be China and S. Korea with less going to Mexico and the EU. Large exports to China keep rolling and these are expected to continue, but will vary from week to week. The continued weather problems in South America, with dryness in south Brazil and Argentina, is forecasted to the end of the month. The pullback after the jump up is expected as funds take profit as they are still long about 1.8 billion bushels. Ethanol production is slowly growing but lockdowns could put an end to that.


Via Barchart

 


Soybeans have had a very strong week following the USDA report. They did not make any adjustments to their export estimates ,but did lower yield to 50.7 BPA from 51.9 BPA. They also lowered ending stocks which was the big mover as carryout is expected to be 190 million bushels down from 290 million last month. Like corn, soybeans have some support from South American weather issues. Beans have held on to most of their gains after the report where corn has dipped back. Soybean demand will continue as China is a buyer and meal is needed as well for hog feed. Funds continue to have a record long position in beans (1.4 billion bushels). With this huge run up beans could see a 20+ cent pullback and still be seen in a bullish trend.


Via Barchart

 


Dow Jones
The Dow had a huge day Monday on Covid-19 vaccine news, but came back down to earth a little bit throughout the rest of the week as Covid cases in the US and around the world continue to surge and make new daily highs. As officials continue to warn that we are about to enter the worst time of Covid, we’ve seen lockdowns in major cities are starting to go back in effect.

Via Barchart.com

06 Nov 2020
Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 31 – NOVEMBER 6


Corn mounted a comeback to get back above $4.00 this week on export news along with South American dryness. Corn needs China to continue to be huge buyers as they try to follow soybeans higher. Corn exports this marketing year are running 179% ahead of this week last year and are already 56% of what the USDA forecasted. If the USDA raises export forecasts because they see this trend continuing, that would be bullish on the demand side as we head into 2021. Corn has not had the violent swings like soybeans but their charts look similar as exports have been their main mover. South American weather will be a market mover as we head into their growing season so keep an eye on their dryness because if it continues in future forecasts it will be bullish. The election does effect the commodities market, like every market, so there may still be some volatility as the election results slowly (very slowly) come in.

Via Barchart

 

Soybeans have had a very strong week after slipping a bit to end October. With huge export numbers continuing and a dry La Nina pattern forming in South America, U.S. bean prices topped $11 for the first time in 4 years. The factors causing this run up have still been exports and South America worries, with exports being the main factor (for now). The continued forecast of dry weather in South America is starting to get long enough to cause some serious worries about the crop, especially if the forecast keeps the trend in some regions. The U.S. Dollar has also fallen over the last week helping U.S. commodities become more favorable to other countries. As the election may be up in the air for a while for both the presidency and senate all markets will remain volatile. We continue to suggest selling all your soybean crop and not carry any into 2021 to take advantage of this run as prices in March are lower than January futures.


Via Barchart

 


Dow Jones
The Dow took off this week despite all the volatility going on with the election and so many uncertainties days later. As quickly as it fell last week it has recovered just as fast this week. Still many questions remain about the election outcome, which the market will be watching closely, but markets are banking on the republicans maintaining control in the Senate which would hinder any large scale democratic changes for the time being.

Energies
The energy sector got a boost out of the election as they believe the Republicans can keep control of the senate, which would put a fork in the “Green New Deal” or any other major energy overhauls that could have been accomplished with a democratic sweep.

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