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Managing Today’s Market Risks through Short Dated Options with CME Group

It is no secret that commodity markets have been on fire over the past 12 months.   On today’s podcast we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real world application of the use of short dated options to potentially fight the current blaze of volatility surrounding agriculture markets. As the director of Research for RCM Jody is no stranger to the podcast.  Tim, is the Managing ...
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AG MARKET UPDATE: JULY 15 – 22

Corn made small gains early in the week only to fall short heading into the weekend as weakness continues to creep into the market with poor exports continuing and weather uncertainty. The hottest temperatures of the year for the plains and western corn belt are expected in the next few days with the only relief possibly coming past the 7 day forecast. As bad as things seem in the western corn belt, the eastern corn belt is having great weather, but will it be enough to offset those loses? Brazil’s crop continues to get smaller, despite the USDA not making ...
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AG MARKET UPDATE: JULY 8 – 15

Corn rallied this week following Monday’s USDA report that was relatively neutral. The USDA left expected US yield the same while slightly lowering the 20/21 ending stocks and raising the 2021 production. The USDA did lower Brazil’s corn production numbers, but some estimates still think they are overstating what it will be. The USDA dropped Brazil’s corn production from 98.5 million tons to 93 million, while only raising Argentina’s 1.5 million. The drought conditions persist in the upper Midwest as some areas are expected to get rain over the weekend. The drought in the Canadian prairies and Dakotas does not ...
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AG MARKET UPDATE: JULY 1-8

The corn market fell thanks to the rain that was received in the Upper Midwest over the 4th of July weekend. As always when it rains in areas that need it the most, the market freaks out as if it is a crop making/saving rain. The reality is, although the rain was helpful, there are still significant drought conditions across most of the areas that received rain (see in the drought chart at the bottom). With this said, next week is forecasting rain across the western corn belt providing some more relief to those areas before returning to hot and ...
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AG MARKET UPDATE: JUNE 18 – JULY 1

The USDA Acreage report was released this week and was bullish for corn. Planted acres came in @ 92.70 million acres, which was below the average estimate of 93.787 million. June 1st stocks were also slightly lower than estimates coming in at 4.112 billion bushels. For the second year in a row the USDA came out with less planted acres than pre-report estimates. There was also a note at the start of the report saying there are still 2.18 million acres intended to be planted during the survey time of May 29-June 17. This means that the 92.70 million number ...
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AG MARKET UPDATE: JUNE 11-18

Corn had a volatile week much like beans having a limit down day on Thursday then a strong recovery on Friday. Corn had had a choppy trade this week before Thursday but the collapse in soybeans and soybean oil brought corn down with it. The bearish news for corn was that it was expected to rain in the drought stricken upper Midwest. This rain is much needed and will help but more consistent rainfall over the coming weeks would be needed to help the crop more. The rain will likely pressure markets lower to start the week if forecasts were ...
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AG MARKET UPDATE: JUNE 4-11

Corn had another good week that was made better following the bullish news in Thursday’s WASDE report. At the start of the week corn planting was seen as 91% complete with little progress being made from last week but at this point in the process limited progress is expected. The dryness in the Midwest and other areas of the corn belt can be seen in the drought monitor below. The USDA agreed with what many in the industry have been saying by reducing US and world ending stocks. 20/21 US ending stocks was adjusted down to 1.107 billion bushels from ...
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AG MARKET UPDATE: MAY 28 – JUNE 4

Volatility continued this week as the market suffered small loses week over week. Corn planting was seen at being 95% planted this week with the first crop condition rating of the year at 76% g/e. Early yield estimates from Barchart.com have national US corn yield at 173.2 BPA for a total yield of 14.4 billion bushels. This implies 90.5 million acres planted with a 92% harvest rate. These numbers would lead to shrinking US ending stocks for 21/22 – NOTE these are just estimates and it is very early in the process. This weeks volatility was a classic example of ...
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AG MARKET UPDATE: MAY 22-28

Volatility was the story this week as you can see the dip and bounce back over the last few days in the chart below. Surprisingly it was not the funds alone that triggered the selloff but rather a more balanced mix of funds, commercials, and farmer selling – in short – it appears to have been a bit of profit taking into the end of the month. Corn had strong exports this week with no major cancellations (despite rumors to start the week).  While these rumors of a cancellation dropped prices aggressively, the subsequent large sales of new crop corn ...
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AG MARKET UPDATE: MAY 15-21

Corn had a decent week following the collapse to end last week’s trading. The biggest news was on the export front where China continued their large purchases of corn adding on to the impressive pace of Chinese buying for new crop. The US weather looks good for planting as some areas continue to try to get their crop in the ground ahead of summer temperatures setting in across the country. Other corn demand news remains positive as the EPA is expected to leave the ethanol mandate unchanged and Brazil’s second corn crop continues to shrink. Brazilian private analysis firm Agro-consult ...
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