RCM Ag Services

Category: USDA Report

05 Apr 2021
Agriculture, Corn, Cotton, Grain, Market Commentary, Market Updates, Podcast, Soybeans, U.S. Dollar, USDA Report rcmagserv 0 comment

March 2021 Quarterly Stocks and Planting Intentions Report: The Hedged Edge

The USDA came out with a bullish report???!!!! It’s fair to say that many in the industry (us included) were left speechless. We know that 2020 was a crazy ride for commodities, but it looks like we may be in for an even WILDER ride on the opposite end for 2021. To discuss this bullish report, we’re joined by our two favorite RCM Ag Services Cotton and Grain experts, Jody Lawrence and Ron Lawson, to discuss how this recent report is bound to affect the markets/insurance premiums/loan opportunities and much more in the coming months.

Find the full episode links for The Derivative below:

 

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Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

26 Mar 2021
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

Ag Market Updates: March 20 – 26

Corn struggled to get any momentum going this week, despite having better than expected exports. Corn, like other commodities, has struggled as funds begin to reposition in a “rising interest rates” environment and a strengthening US dollar. There has not been any news out of South America that is either bullish or bearish for corn and it is likely to stay that way into next week. The prospective plantings report on Wednesday is  major and we expect the market news to be relatively calm as everyone holds their breath for next week. This report always has the potential to pull the rug out from under the market, so positioning yourself ahead of it will be important as well as considering some new crop sales as prices are still very good in case the report is bearish.

Via Barchart

 

Soybeans had slight gains on the week as they continue to trade in the same range of the last few weeks. Even though it looks like beans have flattened out on the chart, we are still about 50 cents better than we were on Feb 1st . So even though beans have slowed down compared to Aug-Jan, we still have seen a good last 2 months even if it looks like the momentum is slowing down. Exports were good again this week and there was little changed in the world weather outlook, so beans have been at the mercy of traders and not the fundamental news moving the markets. Wednesday’s report, like with all markets, will be an important measuring stick on beans as we see the acres as well. As it is expected, the USDA will lower ending stocks as exports continue to be strong and ahead of the USDA predicted pace. As always, the USDA can surprise everyone so be prepared for the unexpected and plan accordingly.

Via Barchart

The cotton market got hammered this week capped off by a limit-down movement on Thursday. The cotton market is being moved by the funds and quants as what we are seeing in all other markets is affecting cotton. The fundamental news about cotton is rather bullish as pressure continues to be put on the CCP and cotton coming out of Xinjiang. The exports this week were higher than anticipated as well as large sales going to Vietnam, China, and Turkey pushing cotton higher. With the acreage report next week it is expected that about 40% of the US cotton crop will be planted in West Texas (which is suffering from very bad drought conditions) which will affect planting unless there is a major shift in weather. Cotton will also likely lose some acres to other crops in areas that can grow variety as December soybean and corn prices are much more attractive. The increase in demand coming to the US market along with what could be a very challenging growing season for many areas could lead to a high demand low supply environment.

Via Barchart

Dow Jones
The Dow suffered some losses on the week as the markets leaked lower after a couple of weeks of gains. The vaccination problems in Europe mixed with uncertainty about rates continue to hover over the market. All major indexes were down this week with the Dow as all eyes turn to what the Biden administration has planned in their infrastructure and tax plan.

Prospective Plantings Report March 31st
This report will be a big market mover as it will set the tone for what we have to plan for in the year ahead. This report contains the expected plantings and last year’s harvest for principal crops and tobacco presented on a state basis. Principal crops are as follows: corn, all wheat, winter wheat, durum wheat, other spring wheat, oats, barley, flaxseed, cotton, rice, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, sugarbeets, canola, and proso millet.

Weekly Prices

Via Barchart.com

05 Feb 2021
Agriculture, Corn, Cotton, Dow Jones, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

Ag Market Updates January 30 – February 5


Corn gained on the week as South America has had issues with their first harvest and the continued wet conditions delaying it in north and central Brazil. Huge exports this week to China and other strong ones to accompany it were very welcome to see. A total of 293 million bushels, a weekly record, was the good news the bulls needed. It is easy to get in a lull where you expect these exports at this point with the past few months of demand but whenever they come in above or at the high end of expectations it is what is needed to keep the momentum. Funds continue to be long close to 2 billion bushels, so like beans the daily volatility may stick around. Continued exports and continued delay of Brazil’s harvest will be the bullish news under the market going into the USDA report on Tuesday that could throw some surprises at us – there is one thing we know for sure it is the USDA is full of surprises (both good and bad).


Via Barchart

 


Soybeans rebounded this week as the markets were not as volatile as the previous couple of weeks. South America got some welcome rain in parts of Argentina and looks to remain hot and dry for the near future. The wetness in Brazil delaying their first corn harvest does not have much of an impact on soybeans, but as we know any big news for one of them will still have a ripple effect. Funds continue to be long as they entered the week long 820 MBU. As mentioned last week when funds decide to take profits, we may see price volatility in stretches. Good exports this week continued as we see consistent demand from China. As beans have been range bound the last 2 weeks relative to the past few months there has been end user buying dips below $13.50 to provide some support.


Via Barchart

 


Cotton got a strong bounce on Thursday after trading relatively flat for the week. This week’s exports were strong with cotton going to 18 destinations. Overseas mills demand has stayed consistent and will continue to be the driving force behind cotton. With all the cotton that has been sold it is not hard to imagine that there will be a supply squeeze here in the US that will continue to drive prices higher as well. The supply squeeze will come as demand remains high; however, at some point we will begin to run out of cotton to export if current pace keeps up. Outside political pressure on China and their accused human rights abuses continue to cause them troubles exporting cotton which has helped the US. As great as cotton’s run has been it still is well below where it needs to be to be competitive with grains. For this reason, cotton acres are expected to fall over 500,000 acres to 11.5MA which would be supportive for new crop cotton as we head into the spring, but will we get a rally before then to keep those acres? The demand is there so it may be a last-minute decision for some farmers.


Via Barchart

 


Dow Jones
The Dow gained this week and traded to new contract highs as market volatility has slowed down following the short squeeze drama of the last week. Covid-19 cases in the US have been trending lower for new daily cases along with vaccines continuing to roll are both great news. It is also earnings season so there has been lots of news both supportive and negative for many companies as any positive COVID-19 news seems to be the biggest overall market mover.

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 2/4 the price for corn is $4.4937 and soybeans are $11.5525.

February USDA Report
Reminder to keep an eye on the USDA report on Tuesday the 9th. This report historically has not contained as many surprises but with the recent Chinese demand we may see another update of the expected ending stocks and exports. We are expecting Tuesday’s report to be a market mover.

Weekly Prices


Via Barchart.com

29 Jan 2021
Agriculture, Corn, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

Ag Market Updates: January 17 – 29

Corn gained on the week as it made up for the fall to end last week. Export numbers continued to be strong and Brazil’s harvest has faced delays. A huge corn sale to China announced Tuesday morning was welcome news as well as record ethanol bookings into China through ADM helped.  This looks to continue into the spring as Brazil is struggling with their pace of shipping as well as the harvest delays. US corn is still very competitive pricing on the world stage which is also supportive. This is important because it keeps exports going as demand continues to ramp up around the world as well as when there is a selloff by the funds it is a buying opportunity for other countries. The volatility of the last week has been important to keep an eye on as we have seen some wide ranges traded within one day. As we have seen some big run ups in a day, we have also seen fund selling to bring it back down. As you can see in the chart below the intraday range over the last week has been larger compared to how we got here. As flooding continues to cause harvest delays in Brazil, mostly in beans, this will be important to keep an eye over the next few weeks heading into corn harvest.

Via Barchart

 

Soybeans lost again this week with most of the losses coming from last Friday’s sell off and have seen a good bounce back from the low of $12.98 Monday morning. The flooding in Brazil has caused delays and other issues with bean harvest. Despite large exports the past week the early rallies on Thursday fell through to losses on the day closing below the 20 day moving average. Funds have been selling on the recent rallies which, like today, may continue to be the trend as funds take profit on this impressive run. The outlook has remained bullish as fundamentally the demand is still there and South America’s struggles may continue hurting their yield. Argentina’s crop condition is below 20% good/excellent and last year it was at 70% this time last year to shed some light on how much their crop is struggling. China will need to continue buying any dip down caused by fund selling but if they stop and funds sell the immediate support of sales would disappear. After this run up a pause and drawback may have been needed as we await South America’s harvest but how the month/week ends will be critically important heading into February.

Via Barchart

 

Dow Jones
The Dow lost on the week amongst a lot of volatility (I’m not going to get into the whole GME, AMC, etc drama). Vaccines continue to roll out as states struggle to implement their vaccination strategies while on the federal side the government is trying to get states more so they can ramp up a somewhat dysfunctional rollout. Despite the struggles the good news is we can see the light at the end of the tunnel. Many investors are bullish for 2021 as we come out of a year long lockdown while some still think we are due for a correction at some point.

January USDA Report
The RCM Ag team had a roundtable discussion following the January USDA report. Here are the links to view/listen to it on your platform of choice.

 

Weekly Prices

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:

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