Category: Uncategorized

25 Aug 2023

The Role of Commercials and End Users in the Agriculture Industry: Understanding Price/Volatility Risk and Proactive Risk Management


The penultimate step of the process for grain is reaching a commercial elevator before going to an end-user to be converted to a final product. These elevators range in size from your local country elevator with little storage capacity to large elevators with millions of bushels capacity. While some producers deliver straight to the end user in areas where that is an option, commercial elevators handle millions and millions of bushels a year of almost every commodity grown in the US. Once the elevators receive the grain, they ship it to the end-user by rail, barge, or other means.

Commercials and How They Fit In

While commercial elevators come towards the end of the process, they have made selling grain as a farmer easier with convenient locations and increased capacity. Railroads played the largest role in the growth and expansion of the United States in the West, which directly led to the growth in farming in the late 1800s. While all elevators are not along railroads or major waterways, you will find the larger ones here as these locations allow for more volume.

On-farm and off-farm storage (elevators) for grains have grown over the years as the US produces more and more while the world consumes it. For the last 20 years, storage capacities have grown close to even with the increase in production and will continue to grow as the world population grows and more supply is needed.

Another example of a commercial facility would be a crush facility. The growth of soybean crush capacity has expanded in the last several years and looks to continue as the demand for soybean oil used in renewable diesel continues to grow. The growth in renewable diesel over the last few years and years to come have made crush facilities a major commercial player now and will only get bigger in the future. Crush facilities close to the growers allow easier access to the beans and competitive prices increase demand.

While it will take time, we will see a shift from soybean meal to soybean oil as the main product coming from these crush facilities. Clean Fuels Alliance America projected renewable diesel production could hit 5.5 billion gallons but 2026 if expansions and new facilities continue. This increase would raise demand for more soy oil, changing the commercial structure that the US has seen in the last 20 years.

End Users and Their Role

End users consume the commodity in all sorts of ways. From feed yards to crush facilities (who then sell the oil and meal) to food production companies, end users cover a wide range of groups. These users face risk on several sides, with the cost of inputs going up and the value of their finished product going down due to other factors. End users face basic economic factors such as recessions and inflation that will affect their revenue, making them adjust their plans of inputs.

While the easy way to think about end users is who makes your cereal, it is crucial to remember how large the commodity space is and that it touches almost every industry. Homebuilders are end users and have seen an increase in their inputs, with lumber moving higher in 2021 before moving lower. If these types of companies cannot effectively manage their risk, it can cost consumers hundreds, if not thousands, of dollars each year.

Proactive and Disciplined Risk Management

Along with the enormous capacity, commercials, and end users also carry a tremendous amount of price/volatility risk requiring a proactive and disciplined risk management approach to maximize the margins of their operation and keep the system moving forward.

Today’s volatile markets have brought unprecedented levels of risk and reward, highlighting the significance of adapting to this environment. With its interdependent supply chain, the agriculture sector is particularly susceptible to the ripple effects of market fluctuations. This is especially true in the current inflation landscape, soaring prices, energy scarcity, and labor shortages.

How RCM Ag Services works with Commercials

RCM Ag Services utilizes our independent standing, national producer reach, and tech partnerships to bring our commercial agriculture customers best-in-class tools and resources to improve efficiency, increase revenues, and generate more customer volume. With our suite of tools and products, your operation can share in markup on products, improve risk management, achieve better FCM clearing rates, and produce more bushels.

Our market commentary allows commercial elevators to keep up with what is going on all over the country and other parts of the world in an easy-to-read and follow format. This allows you to focus on your operation and make it run to its best ability.

For more information on how RCM Ag Services can support your team, follow the link below.

02 Aug 2023

Agricultural Risk: The Role of Intermediaries

Agricultural Risk: The Role of Intermediaries

Agriculture is an inherently risky business. Growers and farmers face a wide range of risks, including weather-related events, changes in commodity prices, and supply chain disruptions. These risks not only affect the farmers but also impact every actor along the supply chain, from processors and distributors to retailers and consumers. This blog will discuss the importance of intermediaries in managing agricultural risk.

Several types of intermediaries play a crucial role in managing agricultural risk. Futures commission merchants (FCMs) are one such intermediary. They provide access to commodity futures markets, where farmers can manage price risk by buying or selling futures contracts. Exchanges, such as the Chicago Board of Trade, also play a critical role in managing risk by providing a platform for price discovery and risk management.

Types of Intermediaries:

Futures Commission Merchants (FCMs):

FCMs are regulated entities that act as intermediaries between buyers and sellers in commodity futures markets. They facilitate trades, provide margin financing, and manage the risk exposure of market participants.


Commodity exchanges are marketplaces where buyers and sellers can trade standardized commodity contracts, such as futures and options. Examples of exchanges include the Chicago Board of Trade (CBOT), the Chicago Mercantile Exchange (CME), and the Intercontinental Exchange (ICE).

Brokers/Farm Advisors:

Brokers and farm advisors provide hedging services and market knowledge to help growers and other market participants manage price risks. They can help with market analysis, risk assessments, and hedging strategies.


Originators and merchandisers are intermediaries who connect buyers and sellers of agricultural commodities. They can help farmers and growers find markets for their products and help buyers source the commodities they need.


Co-ops are farmer-owned organizations that provide services such as grain storage, handling, and marketing. In some cases, they function as elevators, buying grain from farmers and selling it to end-users.

University Extension Offices:

University extension offices provide research, education, and outreach services to the agricultural community. They can help farmers and growers stay informed about new technologies, best practices, and market trends.

Importance in the Big Picture:

Intermediaries are essential to the smooth functioning of agricultural markets. They help manage risk exposure along the supply chain and facilitate the movement of commodities from producers to end-users. Farmers and growers would face more price volatility and uncertainty without intermediaries, and end-users would face supply shortages and price spikes.

RCM Ag Services: Your Trusted Partner for Agricultural Intermediary Services

At RCM Ag Services, we provide a range of intermediary services to the agricultural community. We offer futures and options brokerage, cash grain marketing, risk management consulting, and crop insurance services. Our team of experienced professionals can help farmers and growers manage price risks and navigate the complex world of agricultural markets.


28 Jun 2023

RCM Ag Services’ Top 5 Takeaways from @ChiGrl Live Ag Talk on Place Your Trades

Recently, we had the opportunity to tune in to the captivating podcast episode of @ChiGrl Live Ag Talk on Place Your Trades. The discussion covered various topics impacting the agricultural industry, and we at RCM Ag Services were inspired by the valuable insights shared. Here are our top five takeaways and what they mean for you.

Takeaway 1: Conflict Between EU and Dutch Government: Implications for Farmers

The conflict between the European Union and the Dutch government has significant implications for farmers in the Netherlands. Dutch farmers are vital to the country’s economy and food production, but they face challenges due to the EU’s regulations aimed at environmental sustainability, food safety, and fair competition.

Farmers are concerned about the financial burden of complying with EU regulations, which can require investments in technology and training. This can increase costs and impact their profitability. Compliance may also restrict their autonomy and traditional farming methods.

The conflict raises questions about the competitiveness of Dutch farmers within the EU market. Protecting and supporting farmers could be seen as creating unfair advantages, while prioritizing EU compliance may risk their economic viability.

To address these concerns, constructive dialogue between the EU and the Dutch government is necessary. Government support through financial assistance, incentives, and technical guidance can help farmers transition to more sustainable practices. Finding a balance between sustainable farming and farmers’ economic well-being is crucial.

Takeaway 2: Germany’s Ambitious Organic Farming Goal: A Sustainable Approach

To truly comprehend the implications of Germany’s ambitious plan to reach 30% organic farming by 2030, it is essential to delve into the multifaceted elements contributing to its success. Central to this exploration is an understanding of the role played by government support, incentives, and infrastructure in realizing this transformative vision.

Government support is a crucial driver in facilitating the transition to organic farming.

By examining the effectiveness of existing programs, we can gain insights into the policies and initiatives put in place to encourage farmers to adopt organic practices. This analysis can shed light on the financial and technical assistance provided to farmers, such as grants, subsidies, and access to expertise and resources. Understanding the extent of government support allows us to gauge the magnitude of the commitment and the resources allocated to facilitate this transition.

Incentives are also pivotal in motivating farmers to embrace organic farming methods. By investigating the range of incentives available, such as premium pricing for organic produce, tax incentives, and preferential market access, we can assess their effectiveness in encouraging farmers to switch. Exploring the incentives landscape helps us gauge the level of support and recognition organic farmers receive, influencing their decision to adopt organic practices.

Infrastructure development is another critical aspect that underpins the successful implementation of Germany’s organic farming goal. Establishing robust markets and distribution networks for organic products is essential to ensure a steady demand and supply chain. Analyzing the development of these networks, including the involvement of retailers, processors, and certification bodies, provides insights into the growth potential of the organic market. Understanding how the infrastructure is evolving enables us to identify potential gaps or areas that require further development to support the expansion of organic farming.

By unraveling these key aspects—government support, incentives, and infrastructure—we gain valuable insights into Germany’s journey toward cultivating a greener and more sustainable agricultural landscape. This holistic examination allows us to appreciate the challenges, opportunities, and potential pathways for success in achieving the ambitious target of 30% organic farming. It also offers valuable lessons and inspiration for other countries and stakeholders looking to foster sustainable agricultural practices and contribute to a more environmentally conscious future.

Takeaway 3: Reducing Methane in Farming: Goals and Strategies

The United States is committed to addressing methane emissions in farming to fight climate change. However, there are challenges farmers face in adopting methane reduction technologies.

One challenge is the cost, as these technologies require significant investments in equipment and infrastructure. This can be particularly burdensome for smaller-scale and resource-constrained farms. Lack of financial resources makes it difficult for farmers to adopt these technologies, despite recognizing their environmental benefits.

Another challenge is the technical requirements and maintenance of methane reduction systems. Farmers need to understand the technology and its installation, operation, and upkeep. However, specialized knowledge and training may not always be accessible. Regular maintenance and troubleshooting can also be challenging for farmers with limited technical expertise or resources.

To overcome these challenges, it is crucial to explore the economic and environmental benefits of methane reduction in farming. Methane is a potent greenhouse gas that contributes to climate change and air pollution. By reducing methane emissions, farmers can improve air quality and save costs in the long run by improving operational efficiency.

Government policies and support are essential for widespread adoption of methane reduction practices. Financial incentives like grants or subsidies can assist farmers in implementing methane capture and mitigation systems. Technical assistance programs and knowledge-sharing platforms are vital in helping farmers navigate the complexities of adopting these technologies.

Evaluating existing policies and support mechanisms is important to identify successful strategies and areas for improvement. By studying the effectiveness of current initiatives, policymakers can refine their approaches and develop targeted solutions. Collaboration among government agencies, agricultural organizations, and researchers can foster innovation and develop best practices for methane reduction in farming.

Takeaway 4: Government Support for Biofuels: Impact on Agriculture and Energy Sectors

Governments in Canada and the United States are actively promoting biofuels as a sustainable alternative to fossil fuels. Let’s explore the benefits and drawbacks associated with these renewable fuels to gain a comprehensive understanding of this government push.

Biofuels offer environmental and energy security benefits. They can reduce greenhouse gas emissions since they are derived from renewable sources that absorb carbon dioxide during their growth. When biofuels are burned, they release roughly the same amount of carbon dioxide absorbed during production, resulting in a near-neutral impact on emissions. Replacing fossil fuels with biofuels can make significant progress in mitigating climate change.

Biofuels also have the potential to decrease dependence on imported fossil fuels. Producing biofuels domestically using local feedstocks enhances energy security by reducing reliance on foreign oil and gas. This can create jobs, stimulate economic growth, and benefit rural areas where feedstocks are produced.

However, it’s important to address potential drawbacks and challenges. Competition for agricultural land is a concern, as biofuel production requires significant land use. This can lead to conflicts between biofuel feedstock crops and food crops. Careful management is necessary to balance biofuel and food production, avoiding deforestation and biodiversity decline while ensuring food security.

Water usage is another consideration, as some biofuel feedstocks require substantial amounts of water. Expanding biofuel production could strain water resources and exacerbate water scarcity. Sustainable water management practices and water-efficient feedstocks are important to mitigate these concerns.

The potential impact on food prices is a valid concern as well. If biofuel feedstocks compete with food crops, it can affect food availability and affordability, especially for vulnerable populations. Policies should ensure that biofuel production doesn’t negatively impact food security.

To promote the biofuel industry’s growth and viability, innovation is crucial. Research and development efforts focus on improving feedstock development, including non-food crops and algae, to reduce competition with food crops and increase yields. Advancements in processing technologies can also contribute to sustainability and cost-effectiveness. Continued investment in research, along with supportive policies and incentives, can drive further innovation in the biofuel sector.

Takeaway 5: Technology’s Role in Future Farming: Precision, Automation, and Sustainability

The episode highlighted technology’s crucial role in shaping the future of farming. Integrating technology into farming practices comes with challenges and barriers that need to be understood.

One challenge is the cost of adopting farming technology. Precision agriculture tools and automated systems require significant upfront investments. Farmers must assess the long-term benefits against the initial costs and ensure the financial feasibility of implementing these technologies.

Accessibility is another consideration. Not all farmers have equal access to technology, especially in rural or developing areas. Addressing infrastructure, connectivity, and technological literacy issues is important to ensure inclusive technology adoption that benefits all farmers.

Proper training and support are crucial for successful technology integration. Farmers need to acquire the skills and knowledge to effectively use and maintain the technology they adopt. Training programs and workshops can bridge the knowledge gap and empower farmers in utilizing available technological tools.

Ongoing technical support is vital to address any implementation or operational challenges that may arise. Access to reliable assistance and troubleshooting resources ensures a smooth transition and minimizes disruptions to farming operations.

Precision agriculture techniques, automation, and artificial intelligence applications offer benefits such as optimized resource use, improved yields, and reduced environmental impacts. Real-time monitoring, disease management, efficient irrigation, and waste reduction are some of the advantages technology brings to the agricultural industry. By harnessing technology, farmers can enhance profitability while reducing their environmental footprint.

Supporting Farmers and Industry Professionals in the Ever-Evolving Agricultural Sector: Discover the Expertise and Tailored Solutions of RCM Ag Services

RCM Ag Services is committed to supporting farmers and industry professionals navigate these complex agricultural landscapes. Our team of experts is well-versed in the latest trends, regulations, and technologies impacting the industry. We provide various services, including consulting, risk management, and financial solutions tailored to your specific needs.

If you’d like to learn more about how RCM Ag Services can assist you in optimizing your operations and staying ahead in the dynamic agricultural sector, schedule a call with our team here. Together, we can explore strategies to help you thrive in an ever-evolving industry.

Don’t forget to check out the full episode of @ChiGrl Live Ag Talk on Place Your Trade for an in-depth discussion on these critical agricultural topics. You can find the episode on their Twitter page here:

07 Nov 2022

THE LEONARD LUMBER REPORT: 11 straight weeks of a trading range between $430 and $550

Weekly Lumber Recap 


It has been 11 straight weeks of a trading range between $430 and $550. I have been able to cover virtually every negative or positive effecting this industry during that time. What we do know today is that single family homes are no longer affordable which will show in the data at some point. On the multifamily side there continues to be very profitable sales and/or rentals. Given those two points the question becomes how much wood needs to be taken out of the market before it reaches equilibrium. Let’s rehash some of the key points to see if any are indicators yet.

The builders are going to lock it down going into 2023. That is a given. I am seeing indications that the buy side is already gearing up for it. There is no building of inventories. It is a buy as needed cycle. With prices going down, it is a simple and efficient process. Just remember a zero inventory policy when construction isn’t dead sometimes backfires but in any case it will keep things lean. To sum it up, we are looking for a falloff in starts and a general zero inventory policy.

Supply will be curtailed. There will be continued moderate reductions. I expect to see less Euro as they work through the winter. I still expect to see a pickup in China. They have not been in the market for a very long time. Finally, we always have rail disruptions from the possible strike in a few weeks to winter issues. There will be less wood in the system.

The problems today are all the unknown’s. This is driving the zero inventory policy in the US. Someone said it well Friday when she mentioned that the Fed is “burning growth.” To be clear they are slowing down an overheated economy. An economy that they overheated. This back and forth will cause something to break. If the only thing to break is housing then we are close to being done. If there is more we will feel that effect.

The trade has many unknowns and stuck in a range. This upcoming week has the election and probably news of preparations for a possible strike. It’s hard to be short futures but I don’t expect to see much cash activity because of it.

Buy January calls and take the rest of the year off….


Lumber Futures Volume & Open Interest

CFTC Commitments of Traders Long Report

Lumber & Wood Pulp Options


About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.


Brian Leonard

[email protected]


22 Apr 2022


Corn has had a good past couple of weeks despite the pullback on Thursday. Planting has gotten underway across the country; while some areas are not quite ready, the next month will be as important as the last few years for weather. The western corn belt needs some rain, and the plains need warmer temperatures to begin planting. The uncertainty with Ukraine remains, but there have been reports that farmers have already planted 20% of their spring crops despite the ongoing war. While this is bearish for prices, it is important to note that there will almost definitely be a drop in total acres. China’s lockdowns in Shanghai continue as they remain a big question mark in the short run as to how their covid restrictions will play out. For now, keep an eye on US planting weather as a delayed crop will lead to yield loss, the current prices for new crop would move higher, and supplies would get tighter. Ethanol production last week was the lowest since September, with some plants down for maintenance and rail transportation prices higher; this is not surprising but will be something to keep an eye on with gas prices still elevated.

Via Barchart

Soybeans have had a good couple of weeks after a short period of movement lower. Exports this week were on the low end of expectations outside of new crop bean sales, seeing a decent number. Bean oil prices continue higher supporting beans to move higher. After trading sideways for a bit, then lowering this move upward looks to continue and possibly test the highs we saw in late February in a wildly volatile trading day. China’s ag ministry said they intend to produce 20.63 million tonnes of beans this year, up from the 16.4 million last year. Like corn, the weather needs to improve across much of the US to feel better about this crop’s potential.

Via Barchart

Dow Jones

The Dow was up slightly on the week and reached its highest point in over two months before falling lower on Thursday. There has been a lot going on with earnings, but Netflix posted the most headline-worthy while losing a billion in market cap, and Tesla posted a solid quarter to provide some support. Inflation and interest rates continue to be the talking points as everyone looks to point fingers at noncontrollable factors. The next quarter will be important to see if inflation can get under control or if more warning signs come to the market. The “growth trade” will be challenged with rates rising and some valuations coming back down to earth.

Via Barchart

Drought Monitor

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


RCM Ag Services put a unique spin on National Agriculture Day by going international. That’s right, we jumped right into international waters with Maria Dorsett from USDA’s Foreign Agriculture Services for an interesting discussion about linking U.S. agriculture to the rest of the world.

Each year, March 22 represents a special day to increase public awareness of the U.S.’s agricultural role in society, so why not take it one step further by bringing in a global component? As the world population soars, there’s an even greater demand for producing food, fiber, and renewable resources. That’s why we’re taking a deeper dive into the USDA’s trade finance programs, like the GSM-102, which supports sales of U.S. agricultural products in overseas markets and supports export growth in areas of the world that are seeing some of the fastest population growth.

So, jump aboard (no passport needed), as Maria discusses how U.S. companies use GSM-102, what the program features, and the benefits that it offers!





Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].


14 Mar 2022


Corn made slight gains on the week with very volatile intraday markets. The Ukraine and Russian news continue to stay in the market and will likely dominate headlines until it ends. Other news worldwide is that South America got rains in southern Brazil and Argentina, with dry central and northern Brazil. Russian officials announced that they would suspend fertilizer exports through the end of the year, presenting a supply crunch across the world. This week’s USDA report was nonexistent in the markets as there were no surprises. As mentioned last week, Ukraine’s corn crop may not get in the ground as only 60% of seed is on farm; this will be important moving forward as world balance sheets get tighter.

Via Barchart

Soybeans made small gains this week despite the wild intraday volatility. The USDA trimmed South American production again in this week’s report as they continue to baby step lower to what will be a smaller crop. World edible oil prices were up on the week pulling bean oil and soybeans higher. The Black Sea area’s worry and trade have affected the oils market, not just wheat.

Via Barchart

 Wheat fell hard this week with an expanded limit down the day with a small bounce on Friday heading into the weekend. All the short wheat positions that were getting run over had the opportunity to get out this week with the move down. However, the unknown in eastern Europe and China having its worst winter wheat crop on record means there is still upside with volatility. Friday’s gains were welcome to see after three days of large losses. The cash market will be essential to follow as it will help determine the fair market value.

Via Barchart

Dow Jones

The equity market fell again this week as continuing war, and another record inflation number was challenging for the market to figure out. While the market seems like it is struggling to make up its mind, there are pockets that are performing alright. The world economic outlook appears to be teetering, and trying to digest what to do with Russia will be a major decider.

Via Barchart


Tune in as biotech guru Dr. Channa S. Prakash discusses everything from Alabama football, genetics as one of the most extensive agricultural advancements, the most significant risk factors to feeding the world over the next 30-50 years, plus everything in between.

Why producing crop plants with a much gentler footprint on the natural resources will help feed the growing population. How 75% of the world’s patents in agriculture gene editing are coming from China. Understanding that trying to impose restrictions on our ability to grow food can be a considerable risk to agriculture. Listen to hear about these topics and more!





Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

18 Jan 2022

Then Vs. Now — An Overview of Farm Inflation from 1927 – Present

We have seen inflation take off in the last year posting a 6.2% rise in the CPI year-over-year through October 2021 – when thinking about a one-year raise, this is a large and problematic number. This prompts several questions on whether inflation has impacted farms’ profitability in the past few years — like what does this CPI number look like over the long haul (What do we mean by long haul, say about 100 years), and how does it affect farm profitability?

Luckily, RCM Ag Services recently launched a whitepaper that dives into this topic and more. In this paper, we discuss; energy prices that directly correlate to the input/fertilizer prices, the current cost of labor and machinery, understanding how inflationary pressures have changed the world in the last 100 years, a first-hand, short memoir, commentated by RCM Ag Services, Bob Miller, and more!

Take advantage of this free offer and discover essential farm inflation information today — Download now.

11 Nov 2021

The Hedged Edge Makes Top 25 Agricultural Podcasts on the Web

This week, Feedspot selected the Hedged Edge one of their best Agribusiness Podcasts on the web.

RCM Ag Services launched the Hedged Edge Podcast in late 2020, with the goal to provide market updates and bring an educational value to those interested in agriculture. The Hedged Edge delivers in-depth chats with the best and the brightest in the agribusiness, from industry experts like Elaine Kub and Dr. Scott Irwin to in the field specialists like Jody Lawrence and Ron Lawson.

Our pod provides an avenue for agriculture thought-leaders to give commentary and essential reports/forecasts on everything from cotton,  gran, lumber to planting intentions and quarterly stocks. So, in honor of this gracious recognition from Feedspot, let’s dive into The Hedged Edge’s Top-5 episodes (in no particular order):

Lumber Party: Sky High Prices and Dwindling Supply with Kyle Little of Sherwood Lumber

How can lumber prices shoot up nearly 300% in one year? Does it all come down to the Corona-push to homebuying, supply chain issues, environmental swings, all of the above, or none of it at all? We dig into all these questions and more with a lumber veteran, Kyle Little, to get the nitty-gritty explanations on why everyone is talking about lumber.

Acing Agriculture with Dr. Scott Irwin

Dr. Scott Irwin discusses his research on agricultural markets that is widely-cited by other academic researchers and is in high demand among market participants, policymakers, and the media — he also dives into 2021 and beyond, game changers in the ag market, Chinese demand, the USDA report, FarmDoc, and more.

The Fertilizer Forecast with Billy Dale Strader

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.

Cotton Commodities & Options Trading w/ Ron Lawson

Ron’s experience in the agribusiness space spans over 4 decades giving him unique expertise of both agricultural business, and the business of agriculture. In this pod, Ron shares his knowledge on cotton commodities, options trading, “Lawson’s Laws,” and much more.

Agronomy 101 with (Professor) Greg Willoughby

Agronomy is one of the most important facets of agriculture since farming began. Everyone from the farmer to the producer to the elevator depends on the success of agronomist and their advice to the American Farmer – In this episode, one of the top agronomists in the industry, Greg Willoughby, talks about being a “plant doctor”, weather patterns, GMO & organic produce, crop history, technical advances, level 201 education on agronomy, and more.

If you liked our top-five pods, here are a few more that you didn’t know you needed to listen to until now. Check them out below!
Cracking the Cotton Commodities Code
Mastering the Grains Market
Risk Management, Research Writing, and International Protein
Managing Today’s Market Risks through Short Dated Options

Who will make the list next? Stay tuned to find out —subscribe to The Hedged Edge, and  follow us on Twitter, LinkedIn, and Facebook for the latest updates from RCM Ag Services.

08 Nov 2021

The Leonard Lumber Report: The Futures Market Recovers Late in the Week

The Futures Market Recovers Late in the Week as Confusion Over the Supply Picture Grew

There is already tension in the market from the slowdown in logging caused by the higher price levels. Any additional supply constraints will add to the nervousness. The futures market bottomed by midweek as the confusion in logging grew. We saw that last week as supply worries stopped the selling and caused short covering. 

Another reason for the less selling came when futures neared par with cash. That brought in scaled-down buying, which sent the algo and its selling to the sidelines.

Market Focus on Price, Premiums and Discounts

We are starting to see a market return focusing on price and whether it carries a premium or discount. Once futures neared par, there was an uptick in forwarding pricing, and there was a $100 basis, selling showed up. This is how the market is designed to trade but has been missing for a few years. 

The difference now is what once took a whole cycle to change; it can now do it in a few sessions. No one is prepared for that. The fact is, about the time you prep your forward pricing sheets, the opportunity goes away, and a basis opportunity appears. Once the industry gets in sync with the quick cycles, the more they will participate. 

Is the Market at Equilibrium?

There are many factors, with the timing of the year being the greatest. The elephant in the room is the question of whether we are at equilibrium. If we are, the sell cycles could be greater than the buy cycles. The cash market hasn’t seen a push of sales in a while. 

Today with the market being fluid, a mill dropping prices creates a giant sucking sound. The $550 reports this week hurt. If cash is flat early next week, the $550 might be $540. It’s not a lot of cars but it will keep the buyers in the weeds. 

Let’s Get Technical

January is building a trading range of $600 to $700. Given the history of carrying a premium to cash, it is correlating well with the cash market. The oscillators are slightly positive, and the market is in the neutral area for momentum. All in the market is going to stay in the grind higher mode with intermitted swings. Those are opportunities.

Weekly Round-Up

We go into the week with a flat market that has an upward bias. There are more plans in place for both basis trades and forward pricing if it fits. The way futures have been trading; both may get a shot again this week. What we are looking for is more fundamental reasons to keep in place the upward bias. Two more months of fewer shipments from Canada and Europe should be enough to clean up the issues still out there. 

The closer the market gets to ridding itself of those issues, the harder it will become to buy the market. It will be typical. We keep mentioning a flat market because we lost open interest again as November liquidated, most being the spec long side of the market. That added push has brought the market back to neutral and allowed the algo back in the game. The market will not create much open interest in a bear cycle. Open interest will grow when the market is positive and rallying. 

Open Interest

Section23_Lumber_Options.pdf (

About The Leonard Report

The Leonard Lumber Report is a new column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Before You Go…

We’re getting out of the field and onto the mic to bring you weekly market updates, commentary from commodity experts, and monthly interviews with the biggest names in agribusiness. Check out the latest episode of The Hedged Edge here:

05 Feb 2020

The ‘right twice a day clock’ that is gold.

We have long been in the Warren Buffet camp in relation to Gold:

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

Gold sort of acts like the proverbial clock that is right twice a day, and (which is rarely said) wrong the other 1,438 minutes. Gold Bugs were finally proven right for 10 years between 2001 and 2011, after waiting for a dozen or more years for Gold to break out of its doldrums. But then the clock went right back to not working so well with the yikes moment starting in 2012 where it fell more than 40% off its highs, and then another five years of basically no movement, as it was stuck in a range between $1,150/oz and $1,350/oz.

If the chart above doesn’t make it abundantly clear – Gold is not a US savings bond or money market replacement churning out a nice annual yield. Gold is a commodity, with all of the commodity volatility the disclaimers warn you about. A 13% drop in 2 days back in 2013 isn’t exactly the kind of safe, smooth return many selling you Gold would have you believe, and in fact Gold’s kurtosis reading is about 4 times that of a normally distributed curve (meaning 1 in 100 year storms will be much more frequent than you would expect – and way more than a savings account).

And, of course, you can do way worse than investing in volatile gold. You can buy gold coins or gold miner stocks. One, you’ll pay an insane markup, and the other, be at risk of CEO mistakes, debt loads, mining accidents, and so forth.

Which all leads us to Gold’s recent price action, where some are starting to say “hmmmm” again following its breakout to new 5+ year highs.

First, Suki Cooper, precious metals analyst at Standard Chartered Bank.”via Marketwatch

“This is as dovish as we could have potentially hoped for and the gold market has jumped straight on that. The dollar has come off and gold in tandem has rebounded higher.”

And then David Sneddon, global head of technical analysis at Credit Suisse, said in a note to clients recently via CNBC:

“[…] we suspect we could even see a retest of the $1,921 record high, [with a multiyear base that could provide for a] significant and long-lasting rally”

Will Gold go higher? Maybe. Is the chance it goes higher about the same as Cocoa, or Natural Gas, or Chinese Rebar futures. Yes. It isn’t a panacea for all that’s wrong in the world and bloated Fed balance sheets and all the rest. If it were, it would be at $10,000/oz by now given all the Fed meddling in markets, negative interest rates in Europe, Chinese capital controls, and so forth.

We prefer to think of Gold as a historical relic, from a time gone by when currencies were tied to it, and Bond super-villains killed in the name of it.

Photo Courtesy: James Bond Wikipedia 

PS – there is a great piece on Slate’s Blog MoneyBox delving into the economic and political undertones of the famous James Bond Classic: Goldfinger. Was this a classic Bond film with the ejector seat car, or a movie about the Bretton-Woods system of semi-fixed exchange rates restricting British citizens from buying and storing large quantities of gold.

 “…Goldfinger, you see, really liked gold (as the song says “he loves only gold”) [but] the Bretton-Woods system of semi-fixed exchange rates [meant] ordinary citizens couldn’t just own gold. …Goldfinger, being a gold enthusiast, bears little love for an economic policy regime that restricts his ability to obtain it. Thus he isn’t shy about exploiting the arbitrage opportunities that arise under the system…using his industrial permits to obtain gold in Britain and then spiriting some of it off the island for sale in other countries where the price of gold is higher”

We’ll prefer to remember Gold in this light, and for what it’s worth – Goldfinger for the Aston Martin DB5, henchman OddJob, and perhaps the most deliberate use of the double entendre in Bond Girl names; but it’s nice to know there was more to the back story for the movie than just a man who loved Gold.