RCM Ag Services

Category: Weekly Prices

  • Home
  • Weekly Prices
24 Apr 2023
Agriculture, CME, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: THERE COMES A TIME WHEN BEING PROACTIVE AND OR INACTIVE BECOME THE SAME

There comes a time when being proactive and or inactive become the same. That is where this industry is today. A better way to put it is the best offense is a good defense. The daily data bombs send mixed messages. These are messages interpreted differently over the generational chasm. If you are over 40 you are looking for the next shoe to drop in housing. If you are under 40 you are looking for the next opportunity. Neither is right or wrong, just educated differently. Let’s look at the issues.

The first focal point that always amazes me is the difference in cycles between multifamily and single-family. In the last 10 years, single-family construction has had 3 downturns while multifamily has yet to see one. Ask a trader in the multifamily space how things are going, and he will say if this is what a recession looks like then he’ll take it. Ask a single-family trader the same question and he will be leaning more on the negative side. The confusing part is the fact that DR Horton had a great quarter, and the home builder stock index is nearing its all-time highs. Things are not that bad so why can’t wood products pull themselves out of this big hole they dug?

Reports are of almost a record number of multifamily projects going on today. That is why those in that space are enjoying the ride. The confusion is in the single-family sector. Data show that the marketplace is tremendously underbuilt. I think the market is telling us differently. Existing home sales are off sharply. The reason is relatively easy to define. The answer is that a few want to increase their mortgage rate by 200%. This normal supply of homes on the market will not be available for some time. Builders will have to step up to supply the shortfall. Starts are hovering above 2019. That was a year that saw an extreme lack of price volatility. That isn’t my call here. The other focal point is that this market no longer can “lack” volatility. It can remain range bound in the new post covid world but with much wider swings. I think what this market is telling us is that there is still more bottoming work to come.

This coming week I expect to see wide swings caused by position evening in May. There aren’t many who want to carry a position into a no-limit May. That covering will add more pressure down than up. What is marketable is the July contract. It is a few dollars away from being a good hedge buy and also a few dollars away from a good basis trade. The basis traders are cleaning up. July is in the zone.

Lumber Futures Volume & Open Interest

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/lumber.volume.html?itm_source=cmegroup&itm_medium=friendly&itm_campaign=lbr&redirect=/lbr

CFTC Commitments of Traders Long Report

https://www.cftc.gov/dea/futures/other_lf.htm

Lumber & Wood Pulp Options

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

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]

312-761-2636

24 Apr 2023
Agriculture, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Other News, Research, Risk Management, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: APRIL 12 – 21

Corn had a rough week, especially to end the week falling over 20 cents after a small rally. Poor weekly exports, fund selling and the potential for rain in the driest parts of the US pushed prices lower this week. Corn planting was 8% complete to start the week, slightly behind where it was expected to be but in fine shape for this point of the year. Weather will remain a problem from the Midwest with cold temps continuing. Any news out of Russia and Ukraine will continue to move markets.

Via Barchart

Soybeans had a similar week to corn with weakness into the weekend. Brazilian soybeans continue to be at a big discount to Chicago, $2.00, with their record production and storage shortage. China is not as active a buyer as expected in Brazil but less demand from them will lead to more from other places taking away from US exports. The soybean balance sheet has been tight so that would not be a bad thing for global supply but would not be friendly to getting back to $14 beans.

Via Barchart

Cotton was limit down at one point during Thursday’s trade, before bouncing slightly for its worst day in over a month. The export report was less than impressive this week at a 15-week low. The chart broke through its support level during the down trade, changing how the charts look. The chance of rain in west Texas was one of the drivers as it only takes a few well-timed rains to make the markets nervous. While it is still only a chance of rain all eyes will be on if that rainfall comes to fruition. Any widespread rain in west Texas would lead to another limit move lower.

Via Barchart

Equity Markets

The equity markets bled a little this week as the market looks for direction from earnings. The S&P 500 was unable to break through the 4,200 level, coming close before moving lower for the week. Earnings next week for some major companies (Microsoft, Google, Meta, and Amazon) will give us a lot of information that will determine the market’s next move.

Via Barchart

Drought Monitor

The eastern corn belt has gotten plenty of moisture, some too much, so far this winter with the western corn belt dry.

Podcast

With every new year, there are new opportunities, and there’s no better time to dive deeply into the stock market and tax-saving strategies for 2023 than now. In our latest episode of the Hedged Edge, we’re joined by Tim Webb, Chief Investment Officer and Managing Partner from our sister company, RCM Wealth Advisors. Tim is no stranger to advising institutions and agribusinesses where he has been implementing no-nonsense financial planning strategies and market investment disciplines to help Clients build and maintain wealth and reach financial goals since

Inside this jam-packed session, we’re taking a break from commodities, and talking about the world of equities, interest rates, tax savings, and business planning strategies. Plus, Jeff and Tim delve into a variety of topics like:

  • The current state of the markets within the wealth management industry
  • Is there a beacon of hope, or is it all doom and gloom for the markets?
  • Other strategies to think about outside of the stock market and so much more!

 

Via Barchart.com

 

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].

 

12 Apr 2023
Agriculture, CME, Corn, Dow Jones, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: MARCH 31 – APRIL 12

Corn has been down over the last week and half after the prospective plantings report and this week’s supply and demand report. The theme has been a lack of market moving news with little surprises in the reports. This week’s report was slightly higher than pre-report estimates for US and world ending stocks, but slightly below estimates for Argentina and Brazil’s production. The market did not react much either way to the report as the market continued to trade in its current range. Cash basis is rising and planting is rolling this week, expect this range bound trade to continue between the March 22nd low of $5.47 ½ and resistance at the 20 DMA at $5.61 until there is a catalyst to move it.

Via Barchart

Soybeans had a similar week to corn as they traded lower off the post planting report bump. The demand for beans has picked up recently but US and world stocks came out higher than anticipated. Basis continues to improve for beans as well with South Americas crop continuing to get smaller. We continue to learn how bad the Argentine crop is with potential to be the smallest crop in the last 20 years. The recent sideways trend looks to continue for old crop as stocks remain tight with falling Brazilian prices keeping the market from moving higher.

Via Barchart

Equity Markets

The DJIA moved higher this week while the S&P and Nasdaq sank as CPI came in .1% better than expected with year over year inflation sitting at 5%, core CPI was at 5.6%. It is still expected that the Fed will raise another 25 basis points next month, but the markets believe that will be the last rate hike this year. Q1 earnings kick off this week with several big banks, the guidance and response to the recent banking crisis will be the focus.

Via Barchart

Drought Monitor

The eastern corn belt has gotten plenty of moisture, some too much, so far this winter with the western corn belt dry.

Podcast

With every new year, there are new opportunities, and there’s no better time to dive deeply into the stock market and tax-saving strategies for 2023 than now. In our latest episode of the Hedged Edge, we’re joined by Tim Webb, Chief Investment Officer and Managing Partner from our sister company, RCM Wealth Advisors. Tim is no stranger to advising institutions and agribusinesses where he has been implementing no-nonsense financial planning strategies and market investment disciplines to help Clients build and maintain wealth and reach financial goals since

Inside this jam-packed session, we’re taking a break from commodities, and talking about the world of equities, interest rates, tax savings, and business planning strategies. Plus, Jeff and Tim delve into a variety of topics like:

  • The current state of the markets within the wealth management industry
  • Is there a beacon of hope, or is it all doom and gloom for the markets?
  • Other strategies to think about outside of the stock market and so much more!

 

Via Barchart.com

 

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].

 

10 Apr 2023
Agriculture, CME, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: CROSSWINDS VS. HEADWINDS

Crosswinds verse headwinds. I am starting to wonder if the story is of how we all walked 3 miles to school uphill both ways. We are getting to the point where we may just have to take the charts and data from 2020 to 2023 and put them off to the side. While it is reflective historically it may not be the true focal point today. If we push that information to the side, we can focus on today’s factors. All of which we have experienced in earlier cycles.

Positives:

  • The housing market is underbuilt.
  • There has been a generational shift to owning a home.
  • Labor is tight.
  • Real log issues.
  • Great overall employment.

Negatives:

  • The economic question.
  • Highest rates in years.
  • Euro wood. It is a race to the bottom in the wholesale community.
  • The home mortgage business sits with the community bank. They are becoming more restrictive.

 

The negative factors will smooth themselves out more quickly than the positives. Rates and the Euro wood will be less an issue by the third quarter. The economy on the other hand will take much longer to be defined and then to recover. That will be a hinderance to our market. On the positive side, if you build less houses you take care of the labor issue and keep the marketplace thin. That is the direction the home builders have headed towards.

The question coming into 2023 remains the question today. What should the price of a 2×4 be with a 1.2 or 1.1 starts number? That cannot be answered until the Euro problem has cleared up. What I will say is this market has built a box around it. The first thought coming into the year was a muted 2023 trade. That shifted to a higher trade because of business. Now I am an afraid that it is boxed in. What I mean is that momentum will be created only to get hit from the existing factors. This will show up when inventories are light in a falling market and overbuying in a rising market. That is not a sideways trade. It is a trade that finds momentum and then stops abruptly. Opportunity is only available in the middle and lost when the push up or down is in place. It will break out and trade at a higher level eventually, but not anytime soon. For today, real inventories will be a value while the churn and burn crowd are in the liability zone. There is absolutely no reason not to hedge inventories when in this box and futures are a premium.

 

Lumber Futures Volume & Open Interest

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/lumber.volume.html?itm_source=cmegroup&itm_medium=friendly&itm_campaign=lbr&redirect=/lbr

CFTC Commitments of Traders Long Report

https://www.cftc.gov/dea/futures/other_lf.htm

Lumber & Wood Pulp Options

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

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]

312-761-2636

03 Apr 2023
Agriculture, CME, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: ALL MARKETS ARE CYCLICAL

All markets are cyclical, and most will return to their historical value area.  In lumber the lens to look through is a long-term one. One that can bypass the noise and create a sharper picture of the market. If you look at 50 years of lumber futures data, you will come up with a mean close to $330. With a $330 mean the closes of January and March so far this year have been normal. Add to that the fact that May is also hellbent on getting there. This is not an abnormal trade. Trading in the $300’s for months and getting about 6% margins is normal. So, what is different this time? The current cycle. Cycles, like waves, are not perfect. The typical long-term cycle runs from 13 to 18 months. Most planted commodities run in 6-to-12-month cycles tied to the growing season. Lumber has a longer cycle because of the timeline of the project. We a currently in our 13th month of a down cycle. The difference is that this cycle started way up at $1477.40. Just a small percentage correction puts the market substantially higher. A $200 rally in a 6% margin environment would be devastating. Then again so would 5 more months of this current cycle.

Lumber Futures Volume & Open Interest

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/lumber.volume.html?itm_source=cmegroup&itm_medium=friendly&itm_campaign=lbr&redirect=/lbr

CFTC Commitments of Traders Long Report

https://www.cftc.gov/dea/futures/other_lf.htm

Lumber & Wood Pulp Options

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

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]

312-761-2636

31 Mar 2023
Agriculture, CME, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: MARCH 24 – 31 USDA REPORT

The USDA prospective plantings and quarterly stocks reports were released today, March 31st, with a mix of news. The report pegged this year’s crop at 92 million acres while the trade estimates were about 91 million. This led to a mixed trade as pre-report strength faded with futures ending mixed for the day. Current US weather conditions and the expectation of a slow start to planting could lead to this number falling, it is unlikely we will see a number higher than this the rest of the year, similar to last year. Corn stocks were lower than estimates by 69 million bushels and over 350 million bushels lower than last year.

Via Barchart

Soybeans received a boost from the report as with lower acreage and stocks than expected. The planted acreage number came in at 87.5 million acres, lower than the 88.24 million trade estimate. The quarterly stocks were 247 million bushels lower than a year ago, continuing to show the tightness on the balance sheet. South America still has some uncertainty around their crop, but we should get a better idea in the coming weeks. Both numbers from today’s report are seen as bullish for the market.

Via Barchart

Wheat saw some bearish numbers with higher planted acreage and higher stocks than pre-report estimates. 49.9 million acres, 1 million over estimates, and 946 million bushels in stocks, 934 mbu estimate, were both bearish while the price did not overreact. Wheat will follow corn’s lead for now with many questions still surrounding the conditions in the southern plains and the Black Sea.

Via Barchart

Cotton’s bounce this week back to over 83 cents was very welcome after a couple weeks of lower trade. The market did not have a major reaction to the report with planted acreage estimates coming in at 11.3 million acres vs the 11.2 million trade estimate. Speculative short covering helped cotton rally this week while spreads were also a lower than normal percent of the trade. The problem continues to remain of recession fears and how that affects companies purchases trying to weigh supply and demand.

Via Barchart

Equity Markets

Equities had another good week as investors seem to believe the Fed will relax with rate hikes and the banking fears have calmed down along with an ease in inflation pressure as we slowly move lower. Tech companies would be the beneficiary of lowering rates by the end of the year but the Fed’s recent comments would indicate they have no intention to lower rates before the end of the year. There was strength in most sectors this week.

Via Barchart

Drought Monitor

The eastern corn belt has gotten plenty of moisture, some too much, so far this winter with the western corn belt needing more heading into the spring.

Podcast

With every new year, there are new opportunities, and there’s no better time to dive deeply into the stock market and tax-saving strategies for 2023 than now. In our latest episode of the Hedged Edge, we’re joined by Tim Webb, Chief Investment Officer and Managing Partner from our sister company, RCM Wealth Advisors. Tim is no stranger to advising institutions and agribusinesses where he has been implementing no-nonsense financial planning strategies and market investment disciplines to help Clients build and maintain wealth and reach financial goals since

Inside this jam-packed session, we’re taking a break from commodities, and talking about the world of equities, interest rates, tax savings, and business planning strategies. Plus, Jeff and Tim delve into a variety of topics like:

  • The current state of the markets within the wealth management industry
  • Is there a beacon of hope, or is it all doom and gloom for the markets?
  • Other strategies to think about outside of the stock market and so much more!

 

Via Barchart.com

 

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].

 

24 Mar 2023
Agriculture, CME, Corn, Dow Jones, Grain, Market Commentary, Market Updates, Other News, Podcast, Research, Risk Management, Soybeans, USDA Report, Weather, Weekly Prices rcmagserv 0 comment

AG MAKET UPDATE: MARCH 10 – 24

Corn leveled out over the past couple weeks after its move lower into the mid $5 range. Good exports and continued problems in Argentina have been able to keep corn from moving any further lower while funds continue to offload long positions. Corn will continue to trade here until the prospective plantings and quarterly stocks report on the 31st that will play a role in its next move. There could be surprise news that gives it a bump higher or lower but for overall directional change something surprising would need to be in the report. How the USDA adjusts for further losses in Argentina and unpredictable world demand will be two questions to look for in the stocks report.

Via Barchart

Soybeans finally caved and followed corn and wheat lower after putting up a good fight. Brazil’s record bean harvest is under way and with insufficient storage they have to get rid of them driving prices lower to keep US beans even remotely competitive. Like corn the funds are legging out of their long held long positions making the moves sudden and large. Beans saw a nice bounce to end the week making up for Thursdays losses. One would expect the markets to calm down a little next week as the report looms large for any further downward pressure or welcome support.

Via Barchart

Equity Markets

The markets continue to be confused as they look for guidance that does not appear to be coming. Sec. Yellen this week flipped back and forth on whether or not they would increase deposit insurance for a period of time to help calm fears while the Fed went ahead with its 25 point rate hike. The banking issues make analysts think the Fed could cut rates before the end of the year helping tech stocks but ultimately the Fed likely wont cut rates until we are in a recession.

Via Barchart

Drought Monitor

The eastern corn belt has gotten plenty of moisture so far this winter with the western corn belt needing more heading into the spring.

Podcast

With every new year, there are new opportunities, and there’s no better time to dive deeply into the stock market and tax-saving strategies for 2023 than now. In our latest episode of the Hedged Edge, we’re joined by Tim Webb, Chief Investment Officer and Managing Partner from our sister company, RCM Wealth Advisors. Tim is no stranger to advising institutions and agribusinesses where he has been implementing no-nonsense financial planning strategies and market investment disciplines to help Clients build and maintain wealth and reach financial goals since

Inside this jam-packed session, we’re taking a break from commodities, and talking about the world of equities, interest rates, tax savings, and business planning strategies. Plus, Jeff and Tim delve into a variety of topics like:

  • The current state of the markets within the wealth management industry
  • Is there a beacon of hope, or is it all doom and gloom for the markets?
  • Other strategies to think about outside of the stock market and so much more!

 

Via Barchart.com

 

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].

 

10 Mar 2023
Agriculture, Corn, Cotton, Crop Insurance, Grain, Market Commentary, Market Updates, Other News, Podcast, Research, Risk Management, Soybeans, USDA Report, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: FEBRUARY 24 – MARCH 10

The last 2 weeks have not been friendly to corn despite a neutral to bullish USDA report this week. The USDA lowered Argentina’s production by 40 mmt, but the crop could still be smaller amid a historically poor weather year in Argentina. Corn took a nosedive to end the month of February and has taken another leg lower this week, with the new crop hitting $5.50. After a flat trade for most of February the move lower presents farmers with important decisions regarding what to do for crop insurance. With the Feb average price of $5.91, 40ish cents higher than current levels, farmers should seriously look at the highest level of revenue protection you can get. The premiums will likely be high, but the recent price movement has created an uncertain environment with a long way to go.

Via Barchart

Soybeans moved lower again this week after rebounding last week as soybeans have held together better than corn. Bean stocks were tighter than the trade expected while exports were up 25 mbu but crush down 10 mbu. Global oilseed supply and demand forecasts include lower production, crush and stocks. Like for corn, the USDA lowered Argentina’s production below the average trade estimate. While the news out of the report was mildly bullish, the negativity around corn and wheat bled into beans to end the week.

Via Barchart

Cotton was punched in the mouth on Friday after trading lower this week. The USDA did not make any significant changes to the supply and demand report. The lack of demand is the main problem as the global 22/23 forecasts this month include lower consumption and trade with higher production and stocks. The world economic outlook is questionable for the coming year and a global recession would hurt cotton more than other areas.

Via Barchart

Wheat

The story for wheat has not changed as markets continue to get crushed. The report made no major changes to forecasts and balance sheets and there has not been any major changes in Ukraine as Russia continues their assault. Russian officials are expected to meet with UN officials in Geneva on March 13 to discuss the grain deal renewal and trade sanctions.

Equity Markets

Equity Markets moved lower this week on overall market weakness and the Silicon Valley Bank news. While one day doesn’t make a trend, the trend lower since the start of February looks to have room to move lower with another big jobs added number keeping the Fed rate hikes as a question mark.

Via Barchart

Drought Monitor

The eastern corn belt has gotten plenty of moisture so far this winter with the western corn belt needing more heading into the spring.

Podcast

With every new year, there are new opportunities, and there’s no better time to dive deeply into the stock market and tax-saving strategies for 2023 than now. In our latest episode of the Hedged Edge, we’re joined by Tim Webb, Chief Investment Officer and Managing Partner from our sister company, RCM Wealth Advisors. Tim is no stranger to advising institutions and agribusinesses where he has been implementing no-nonsense financial planning strategies and market investment disciplines to help Clients build and maintain wealth and reach financial goals since

Inside this jam-packed session, we’re taking a break from commodities, and talking about the world of equities, interest rates, tax savings, and business planning strategies. Plus, Jeff and Tim delve into a variety of topics like:

  • The current state of the markets within the wealth management industry
  • Is there a beacon of hope, or is it all doom and gloom for the markets?
  • Other strategies to think about outside of the stock market and so much more!

 

Via Barchart.com

 

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].

 

24 Feb 2023
Agriculture, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Other News, Podcast, Research, Risk Management, Soybeans, Weather, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: FEBRUARY 10 – 24

Corn took it on the chin this week as it traded lower to levels last seen in early January. The bulk of the losses came in the second half of this week following the USDA Ag Forum’s bearish numbers. The Ag Forum estimates 91 million acres of corn with a 181.5 bu/ac yield. While these numbers are not surprising as they are mostly just trend line projections the market still reacted in a bearish way as this would raise ending stocks. These numbers also expect neutral external conditions such as weather, politics, etc. While these numbers historically are not the most accurate the market does listen and this was a major bearish factor for the week. They also released their price expectation for the year with December corn being $5.60, this is about 17 cents lower than Friday’s close. February insurance prices for corn sit at $5.95.

Via Barchart

Soybeans moved lower to end the week in sentiment with corn and wheat. The USDA Ag Forum numbers for beans were 87.5 million acres with a yield of 52 bu/ac. These numbers are very realistic and did not send any shock into the market. These numbers would raise stocks by 65 million bushels to 290 mbu which would help alleviate some balance sheet stress. While these numbers were not surprising they did say they expect November bean price of $12.90, so there is room for downward movement in their view. The news that pulled soybeans lower had to do with other commodities as Argentine production estimates continue to fall and Brazil’s harvest is delayed. The insurance average for soybeans is $13.77 for November beans.

Via Barchart

Wheat has struggled the last two weeks after pushing up against the $8.00 mark before falling all the way to $7.08 to end the week. Wheat has moved lower as Russia is selling their wheat the cheapest of anyone, with Egypt purchasing 240,000 tonnes this week. Russia selling their wheat cheaper to gain market share and get money to continue to fund their war on Ukraine. Funds were also sellers this week on the news as they expect Russia to get business as long as countries are saving money. The Ag Forum released estimates for wheat of 49.5 million acres and a trend yield of 49.2 bu/ac. This news combined with Russia were bearish but with first notice day approaches we could see calmer trade than the past few days soon.

Via Barchart

Cotton

The cotton story has not changed much as the supply/demand story has not changed. There is both a lack of demand and a supply surplus here in the US, which has led to less imports of cotton goods. With the potential recession looming the lack of current demand mixed with that does not paint a great picture for cotton as it continues to trade on the lower end of its recent range.

Equity Markets

Equity Markets were down this week as economic data keeps coming in supporting higher rates. Inflation is sticking around and earnings are mixed as February will post big losses across the major indexes. Many market commentors still believe we are heading lower from several different factors including the Fed, inflation, layoffs, valuations and more. Continue to keep an eye on the strengthening USD.

Via Barchart

Drought Monitor

Eastern corn belt has gotten plenty of moisture so far this winter with the western corn belt needing more heading into the spring.

Podcast

With every new year, there are new opportunities, and there’s no better time to dive deeply into the stock market and tax-saving strategies for 2023 than now. In our latest episode of the Hedged Edge, we’re joined by Tim Webb, Chief Investment Officer and Managing Partner from our sister company, RCM Wealth Advisors. Tim is no stranger to advising institutions and agribusinesses where he has been implementing no-nonsense financial planning strategies and market investment disciplines to help Clients build and maintain wealth and reach financial goals since

Inside this jam-packed session, we’re taking a break from commodities, and talking about the world of equities, interest rates, tax savings, and business planning strategies. Plus, Jeff and Tim delve into a variety of topics like:

  • The current state of the markets within the wealth management industry
  • Is there a beacon of hope, or is it all doom and gloom for the markets?
  • Other strategies to think about outside of the stock market and so much more!

 

Via Barchart.com

 

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].

 

21 Feb 2023
Agriculture, CME, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

Leonard Lumber Report: There is still too much wood out there

Commentary: 

There is still too much wood out there. This week the euro traders had to not only deal with a soft market but also with the basis wood getting cheaper daily. Add to the mix that every Friday those with contract wood start off in the negative and you get this extreme malaise. With the amount of construction going on out there the market is either telling us the slowdown will be drastic or we are undervalued. Neither will be answered anytime soon so for today the market is the true indicator. Futures are on day 13 of this sell off. The rally lasted 16 days so the market could be close to bottoming. The resiliency of futures the last few days in light of all the algo selling pressure tells me it is close. What the bounce will look like is anyone’s guess, but the conditions are for a better grind higher market into the spring and not a spike up from the low.  So, prepare for the spike and how for the grind.

Economic:

The housing starts report this week added to the confusion already lingering throughout the industry. Today multifamily units under construction are at the highest level since 1973. Combined single and multifamily there are 1.7 million units under construction. That number bumps up against the record. These are seasonally adjusted numbers. That said, there is near record construction going on with a third of the country dormant because of winter. When digging down into the numbers one must wonder with construction at this pace are we really under built? Rents are sticky, so I would expect that pace to remain in place while single families continue to fall off. The construction dynamics bare some resemblance to the housing market in 2004-2005. That is when the housing bubble burst. The housing sector was in a bear market well before the 2009 economic meltdown. The pace of today’s construction will lead to an overbuilt industry at some point. In a year from now we will not have 1.7 million units under construction. Now let us add to the confusion. The fact is today there are 1.7 million units under construction and that makes $382 way too cheap.

Technical: 

March futures objective is for the January settlement of $344. The gap will be closed at $359.00 but the market is searching for value and that is the last expiration. The fact that the market is headed back to that area is troubling long-term. It indicates that $344 wasn’t a onetime fluke. It was considered a value the first time down and now is the area of rebuilding. The next rally up may just have to correct back again to this area. Momentum is oversold and a correction is coming but the market is not stair stepping higher yet. My only hope is that it isn’t a continuation of the stair stepping lower mode. In any case these are good levels to own wood going into the spring.

Below are the option links to the new contract. Please take a look at the quote page for options.

Quote page: https://www.cmegroup.com/markets/agriculture/lumber-and-softs/lumber.quotes.options.html#optionProductId=10192

Calendar Page: https://www.cmegroup.com/markets/agriculture/lumber-and-softs/lumber.calendar.options.html#optionProductId=10192

 

CFTC Commitment of Traders report still delayed!!

 

NEW CONTRACT:

Lumber Futures Volume & Open Interest

https://www.cmegroup.com/markets/agriculture/lumber-and-softs/lumber.volume.html?itm_source=cmegroup&itm_medium=friendly&itm_campaign=lbr&redirect=/lbr

CFTC Commitments of Traders Long Report

https://www.cftc.gov/dea/futures/other_lf.htm

Lumber & Wood Pulp Options

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

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]

312-761-2636

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.