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21 Nov 2022
Agriculture, Lumber, Market Commentary, Market Updates, Risk Management, Weekly Prices rcmagserv 0 comment

THE LEONARD LUMBER REPORT: With this abrupt pause in our industry it may be a good time to do a review of 2022 and projections for 2023

Weekly Lumber Recap 

11/20/22

With this abrupt pause in our industry it may be a good time to do a review of 2022 and projections for 2023. The reason for an early start is that any movement from here will be the result of first quarter planning. There are three focus areas that will drive prices. The first is the decline in demand and new forward guidance. Next is the cost of production and lastly is the equilibrium equation. Let’s go last to first.

I now call the equilibrium equation a numerical defense. The focus in the last decade was just how underbuilt the housing industry had become. I call it a numerical defense because we continue to use an old formula to get this rather high number. It is based on a husband, wife, two kids and a dog. That isn’t the typical household today, so the underbuilt number is high. In the mid 2000’s we took starts up to 1.6 because of spec buying. If fell to 500 once the spec homes were empty and for sale. This recent hysterical run was fueled by 401K borrowing or buying among other factors. The point I am making is that at 7% mortgages and a 385K starter we are overbuilt.

Next is the cost of production. Does anyone think it could be in the $400’s? Nope. We are all looking at a $600 number. I know I am and can defend that number. That is for 2×4 2&B spruce. I think the entire basket of products may just be cheaper in some respects than we think. A good example is SYP. 10 years ago, that would not play into the mix as much as it does today. The cost of production is a non-defined factor in pricing today. It will be dragged into it eventually, but for today a mill trading spruce under $400 speaks volumes.

Finally, another difficult statistic to follow is demand and construction. We are seeing the expected push in building for yearend. The builders are getting it done while also looking for at least a 30% drop in construction for the first half of the year. This strategy to build and then abruptly stop seems counter intuitive. They are increasing available homes in a falling demand market. What this will do is extend the period of easing until the excesses are cleaned up. It isn’t an economic strategy but more of an accounting move. My first thought is to be careful of the home builder stocks in the short run.

The expectation from here is to look for the shock to the system that turns the market. Until the market experiences it the trade will be one of floating into a buy round that lasts for three days or two weeks. In either case new lows can follow. This market remarkably looks like the lumber market of old. Can that be possible?

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

18 Nov 2022
Agriculture, Corn, Cotton, Crude Oil, Dow Jones, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, U.S. Dollar, USDA Report, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: NOVEMBER 4 – 18

Corn strung together several days lower in a row last week with a neutral USDA report in the middle of it. The USDA raised the US yield to 172.3, which was within the range of estimates. While corn had been trading sideways for some time, the move lower remained in its trading range, followed by a bounce back higher this week. The black sea export corridor deal being renewed is welcome news for the world supply chain. Brazil and Argentina got some needed rain while some dry areas missed out. They are still suffering drought conditions, but it is also still early in the year. Exports improved this week from last, as the current price levels attract buyers.

Via Barchart

Soybeans fell over the last two weeks, due to two days of large losses this week. Soybean Oil got hit as world veg oil prices fell, pulling beans down with it. The rain in Argentina helped speed up soybean planting but rain will still be needed moving forward as still about 25% of the country experiences drought. Bean exports, like corn, improved and better than expected this week. The lack of news makes this a difficult market to trade in as there are no overwhelming bullish or bearish factors dictating direction.

Via Barchart

The US cotton supply was raised in last week’s USDA report with better yields and lower demand. The problem in the cotton market right now is demand. While more money is being spent , fewer units are being bought which translates to less consumption. With the continued high energy prices and inflation issues across the world people are prioritizing eating and heating their homes and fueling their cars (good call) over buying new clothes. The potential for a looming world recession in 2023 does not ease demand concerns as we would not see demand for cotton pick up as producers would sit on inventory they currently have. Until we get more clarity on the world outlook and 2023 it is a time to be cautious. The weakening USD will be worth keeping an eye on.

Via Barchart

Equity Markets

The equity markets started off November with gains after a cooler than expected October CPI of 7.7%. While a drop is nice to see it is important to remember the target is 2-3% so we are still much closer to the top than the bottom with a Fed rate rise coming in early December. The markets seem to expect a 50-point hike, but there is still plenty of time for that to change and get priced in before. One big question that remains for the markets looking ahead is “what will December bring?”. Will there be a Santa Clause rally? Will markets fall as investors do some tax loss harvesting? Many investors still think a recession is coming in 2023 and the next month and half could give us a better idea what to expect.

Via Barchart

Drought Monitor

Podcast

The Hedged Edge is back online with a guest who could be this podcast’s most important guest of all time. At a time when inflation is running rampant through the world economy, drought conditions are drying up our rivers, and the global supply of grain is scarce. We are tasked with the question, “what the hell is going on in logistics, and is there any relief in sight?”

To help address these questions and more, I am joined today by a man that needs no introduction to most in the physical commodity sector – Woodson Dunavant with the Dunavant Logistics company based in Memphis, TN.

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].

 

07 Nov 2022
Agriculture, Lumber, Market Commentary, Market Updates, Research, Risk Management, Uncategorized, Weekly Prices rcmagserv 0 comment

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

Weekly Lumber Recap 

11/6/22

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….

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

04 Nov 2022
Agriculture, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, U.S. Dollar, USDA Report, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 21 – NOVEMBER 4

Corn had small losses on the week again as it has been range bound the last month. The market holding at this level certainly is not a bad thing when it traded $1 lower than current levels in July, it just needs a catalyst to push it one way or the other. The catalyst could be next week’s USDA Report as there could always be a surprise or two for the market. Many estimates see the USDA raising production from the October estimates, but by how much will be the question.  Ultimately with US harvest coming to a close and South America ramping up, the global outlook and weather will begin to dominate the markets. The US will also need plenty of moisture over the coming weeks and winter to 1. Raise river levels to help grain exports and 2. Improve subsoil moisture heading into 2023. Exports remain underwhelming and will likely be lowered for the year in next week’s report.

Via Barchart

Unlike Corn, Beans have had a much wider range after an initial flat start to harvest have rallied back hard over the past 2 weeks. This move higher is welcome and appears to be heading toward a test of the highs from early September – can it break through?  The USDA report will be the big news next week along with any news out of South America for weather and China potentially coming out of zero covid restrictions. Like corn, the USDA will likely raise US production next week and may lower exports. For any sustained move higher China will need to be a regular buyer and South American conditions would need to become less favorable.

Via Barchart

Cotton has had quite the week with 4 days that traded limit up at one point. With a lot of speculative positions in the market being short, this could be seen as a short covering rally as specs must exit their positions before expiration. On the physical side, the global cash market is a mess. Mills have massive inventories of both cotton and converted goods with no companies buying. The lack of buying by apparel companies shows their concern for the holiday season as inflation and market uncertainty will weigh on spending this year.

Via Barchart

Equity Markets

The equity markets have gained over the last 2 weeks; however, gains were muted after the Fed raised rates another 75 points earlier this week. This was expected but the comments by chair Powell after they came out were more hawkish than expected setting up an interesting point in next month’s meeting. Powell said the Fed is not likely to slow down yet setting up the potential for another 75 points in December, while analysts were leaning towards 50 before he spoke. The unemployment rate did tick higher in October while many companies also announced hiring freezes and grim outlooks for the first half of 2023. Crude oil spiked back above $90 a barrel on Friday continuing to bolster energy stocks. Midterm elections next week will also be closely watched as it may lay out what, if anything, will be done over the next 2 years.

Via Barchart

Drought Monitor

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

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 Oct 2022
Agriculture, Corn, Dow Jones, Grain, Market Commentary, Market Updates, Podcast, Research, Risk Management, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 14 – 21

Corn had small losses on the week as harvest continues to roll on. The major ongoing story is the low river levels impacting barge travel along the Mississippi and other major water ways. This is having an impact on basis levels along with exports. Exports for the week were within estimates and ethanol output got back above 1 million barrels for the first time since early August. The exports will be the main factor to keep an eye on in the short term with no immediate relief expected for the Mississippi River with barges backed up and delays on both sides of the supply chain. The drought conditions compared to this time last year can be seen at the bottom, showing how much moisture is needed over the winter.

Via Barchart

Beans made gains this week with China showing back up as buyers but still has a bearish outlook with South America expecting neutral weather. Harvest continues to roll on with 63% done and nothing slowing it down. As always, the US needs to sell their beans before Brazil gets closer to harvest, with a potentially record crop coming from Brazil this year. If China continues to buy and Brazil begins to have weather issues, we could see a rally, but the Mississippi river issues and other bearish problems may have the upper hand currently.

Via Barchart

Equity Markets

The equity markets were positive again this week with mixed earnings and option expiration pushing markets higher. Next week’s earnings will be the most important and set the tone for the rest of the year with Apple, Microsoft, Google, Amazon, Exxon, Visa, Facebook, and many more. The guidance these company’s give will show where the largest companies in the world see the economy in the next 3-12 months. While this month’s trade has been encouraging, many investors think is just a pause before we move lower again, next week may give us a better idea. Mortgage rates topped 7% again this week as the housing market continues to face the fallout.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand compared to this time last year.

October 18, 2022 Valid 8 a.m. EDT (Released Thursday, Oct. 20, 2022)

October 19, 2021 Valid 8 a.m. EDT (Released Thursday, Oct. 21, 2021)

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

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].

 

14 Oct 2022
Agriculture, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Other News, Podcast, Research, Risk Management, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: OCTOBER 7 – 14

The USDA report this week did not make any major changes to the US corn crop estimating a yield of 171.9 bushels per acres, down .6 bu/ac from September. The lack of surprises in the report kept corn trading along its path of late with no major losses or gains. The ending stocks were raised on lower demand with a high USD and world recession fears looming. While the balance sheets remain tight for corn but the recession fears lowering demand eases the balance sheet worries, for now. Harvest is still rolling along with much of the US experiencing drought conditions and no major rains in the forecast for many areas to slow it down much.

Via Barchart

Beans were the surprise of the report with estimated yields falling to 49.8 bu/ac, down 0.7 bu/ac from the September report. US ending stocks were also cut with the yield lowering getting an appropriate reaction higher aster the report. The main concern for beans right now is low demand and the potential of a record Brazil bean crop. The strong USD weighs on bean exports with China being slow buyers, as we have said before to start feeling better about the direction of beans’ price, we need China to show up more often in larger quantities.

Via Barchart

Cotton continued lower this week following the USDA report that saw a bearish reaction despite lower production estimates. Cotton is still fighting the supply vs demand issue to figure out where to go. Right now, the demand, or lack thereof, is winning as prices have been moving lower over the last 2 months. World recession fears impact the demand for cotton with lower demand balancing the lower production. The lack of demand makes it difficult to see a sizeable move higher in the near term but for cotton to be planted in areas that could grow corn and soybeans these price levels will not be attractive. We could potentially see a sideways trade until there is more certainty economically (demand) going forward.

Via Barchart

Equity Markets

The equity markets were positive this week due to a massive rally on Thursday to gain back the week’s losses and some. Inflation came in hot, again, this week giving the Fed the go ahead to raise rates another 75 basis points in November if they want to with a 15% chance of a 100 point raise. The market rallied on the CPI number, despite it being high, showing that there is still room for bounces in a bear market. It is hard to find much good news in the market with the proposed deal between the Biden administration and Rail workers unions falling apart this week as well, bringing the possibility of shutdowns back.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week. As you can see much of the country is in drought conditions and will need moisture over the winter.

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

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].

07 Oct 2022
Agriculture, Corn, Dow Jones, Grain, Market Commentary, Market Updates, Risk Management, Soybeans, U.S. Dollar, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 30 – OCTOBER 7

As you can see in the chart below the relatively sideways trade continued this week. Harvest is rolling along, about 20% done at the start of the week, with no issues across much of the country as most areas are experiencing drought conditions. The upcoming USDA report on Wednesday will update US and South American estimated yields. The low river levels from lack of rain are starting to cause bottlenecks and problems for exports. Elevators may ask farmers to delay delivery until they know they will be able to ship it out of their facility. A continued strong US Dollar will continue to weigh on export demand.

Via Barchart

Beans were relatively flat this week but are still much lower than the highs from last month. Beans have struggled on lack of exports and relatively strong yields. The strong USD and barge situation is hurting bean export demand same as corn. China will be coming out of their week long market shut down on Sunday and hopefully we will see them as buyers more regularly in larger quantities. Harvest was 22% complete this week, off to a great start. The bean market is more vulnerable than corn at this point with less supportive news and poor technical.

Via Barchart

Equity Markets

The markets had a nice two-day rally before losing a solid chunk of those gains heading into the weekend. The hard sell off on Friday was fueled by the strong jobs report. While a strong job report sounds like a good thing, it is one of the indicators the Fed has been using when deciding to raise rates and this would incline them to raise again instead of slowing down. There is not a lot of good news in the market right now with many analysts seeing more downside, while a few thinks this most recent bounce may have put in a good floor.

Via Barchart

Drought Monitor

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

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

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].

30 Sep 2022
Agriculture, Corn, Dow Jones, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 15 – 30

What a day…what a week for grain market volatility!  With the anticipated shrinking US Corn crop, Corn has been moving higher over the last few weeks and today did not disappoint. The Sept 30 USDA report was bullish for corn coming in with quarterly stocks of 1.377 billion bushels. This was below the trade estimate (by roughly 1.6 bu/ac), giving corn prices a boost. The charts remain range bound but are starting to look more bullish. The October USDA report is in 2 weeks and is sure to have some surprises, be prepared for the volatility ahead and take advantage of rallies to catch up on sales.

Via Barchart

Beans have not had any good news over the last 2 weeks as they continue lower into harvest. Friday’s report did nothing to help this, having 274 million bushels in quarterly stocks where the average trade estimate was 242 M/bu. While exports for beans have been slow, this number was much higher than expected and beans had an appropriate reaction lower. With a stronger USD vs international currency, there is limited expectation of any major export news in the near future.  While beans are still about $1 higher than the July lows, there is little hope that additional supportive news around beans is coming to bail out the bulls…higher stocks reported today, Brazil off to a great start to their planting, and limited exports…Bears win (not talking about the @Chicagobears).

Via Barchart

Wheat has had a good run since the August lows and received more bullish news in today’s USDA report. Wheat stocks came in below estimates at 1.650 billion bushels (1.778 billion estimate). The tight world wheat stocks are supportive for prices, along with the continued war in Ukraine. Any developments in the Black Sea trade corridor would add volatility to the grain markets, specifically wheat. Beyond the unknown factors of war sixty four percent of US winter wheat production is in areas that are currently experiencing moderate to exceptional drought. In this case the Bulls are the clear winners (not the @Chicagobulls).

Via Barchart

Equity Markets

The markets were decimated in September with inflation not cooling off, increasing US & global recession fears and continued Fed rate hikes. There is no way around it, the news for the markets has been horrendous, with unemployment numbers remaining the limited good news. The S&P blew through the June lows today and is set to finish the quarter down -4.7% and the YTD down approximately – 24.8%. It’s anyone’s guess from there where the FED will go next; but as of now, they are set to continue to raise rates adding additional pressure to capital markets.

Via Barchart

Drought Monitor

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

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

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].

 

16 Sep 2022
Corn, Grain, Market Commentary, Soybeans, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUGUST 26 – SEPTEMBER 15

Corn has been moving higher since late July with yields being lowered in many areas and supply concern. The USDA report from Monday lowered the estimated US yield forecast to 172.5 bu/ac from the 175.4 bu/ac in August. Most private estimates are in the low 170 range, so it was nice to see the USDA start to agree with everyone that the crop just is not there this year. US and world ending stocks for 22/23 were both lowered as well but the world ending stocks were at the higher end of estimates. The prediction is that South America will have another record crop to take pressure off the disappointing US year. If South America has issues however, world balance sheets could get tight. Ethanol demand/production dodged a bullet this week as rail workers are likely to avert a strike (the large majority of ethanol is moved via rail). Energy markets have also pulled back as recession fears and global slowdown remains in the headlines.

Via Barchart

Beans had the surprise of the report with the USDA lowering the US bean yield estimates to 50.5 bu/ac from 51.9 bu/ac in August. Many estimates believe this to be a great US crop to this point.  Seeing the USDA lower the estimates was a shock and beans shot up +76 cents on Monday as a result.  The lower bushel estimate lowered the US and world ending stocks for 22/23 as well. The trading days following the report have lacked additional bullish news and remain under pressure on Friday as exports remain lackluster. Soybeans need to find buyers, looking at you China!, for the bull case to have more ground to stand on. US prices are still expensive in the world marketplace suggesting we could see a pullback met with some buying. The late heat across the Midwest expected in the next couple weeks will put pressure on beans finish; however is helping with drying corn.

Via Barchart

Cotton has been an interesting commodity to watch over the past few months with of the widest trading ranges in recent memory (51 cents!!). The US production will be low as most dryland in Texas has been zeroed out and will produce 0 (ZERO) bales. For the supply side this is bad news and adds to the already tight global supply. The demand side is littered with it’s own pressures – world recession fears loom, a strong USD (difficult for exports), and continues supply chain issue… the main Demand Theme = “It doesn’t matter how small the crop is is no one wants it”. When a tight supply market meets a low demand market, the next question is “what gives first?” a recession would lead to the demand market winning the race to the bottom.

Via Barchart

Equity Markets

This time last week, the equity markets were bounding higher and all appeard to be clear for the bulls to win the race to the end of the year.  Fast forward 7 days and equities are struggling on the heals of poor consumer data and higher than expected inflation (wait…this is not new!). Tuesday was one of the worst days since 2020 with the markets down sharply across the board leaving investors gasping for air.  Historically, September and October are two of the most volatile months of the year…the first few trading days in September have not disappointed… button down the hatches for the days and weeks ahead…managing risk will be paramount.

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Drought Monitor

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

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

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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].

26 Aug 2022
Agriculture, Corn, Dow Jones, Grain, Market Commentary, Market Updates, Research, Risk Management, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUG 12 – AUG 26

Corn has had a good couple weeks with more news coming out of the pro farmer tour. The PFT pegged the US corn yield at 168.1 bu/acre, well below the 175.4 that the USDA has. This would be very bullish for the long run, while this seems low there is still time to help and hurt the crop. A sub 170 number would be a shock to the system and unlikely the USDA would admit they are that far off anytime soon. Crop ratings continue to fall with a national 55 good/excellent rating. The drought out west has taken its toll on the crop and the numbers show that. Balance sheets would get very tight very quickly with at 168 yield, the cash market is already telling us the demand is there so now we begin the home stretch.

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Beans made small gains with some volatility over the last 2 weeks. There were good exports and sales to China that are welcome news. The PFT pegged the US crop at 51.7 bu/acre close to the 51.9 the USDA had. This seems on par for what we are hearing with a strong bean crop and tough looking corn crop. Beans will benefit from the bearish corn numbers but will need their own story to continue their move higher with continued exports. The weather over the next month looks beneficial for beans as well.

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Equity Markets

The equity markets have taken it on the chin in the last week as markets faded further to end the week on hawkish comments by Fed chair Powell. As we still battle inflation the Fed will continue to look at all data to determine the necessary steps come next months meeting. While it is expected they will continue to raise rates the guidance going forward is up in the air.

Via Barchart

Drought Monitor

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

Podcast

Are the Fed’s hikes starting to dampen inflation? Oil, grains, and metals have all fallen from their highs. But the rarely spoken of Cotton market was one of the first to crack…falling from 1.58/lb to 0.95/lb in just a few short days. We’re digging into this sharp drop and just why and how Cotton is involved in seemingly everything with RCM’s very own cotton king, LOGIC advisors Ron Lawson.

In this episode, Ron is giving us the low down on how and why he believes it’s not Dr. Copper which acts as the global economic barometer, but how Cotton is the real Canary and leading indicator on global demand. In between those talks, we’re covering all things Cotton including crop insurance, irrigated vs dry land, the scam that was Pima and Egyptian Cotton, the process of cotton – which countries have it, which want it, ginning it, spinning it, dyeing it, global commodity merchant co’s pushing it around, and even micro-plastics, climate change, and how Cotton always flows to the cheapest labor source. Finally, we’re walking in some high Cotton putting Ron in the hot seat. Will we ever get the growth back? Tune in to get these critical hot takes — SEND IT!

 

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].

 

 

 

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