RCM Ag Services

Tag: agriculture

29 Apr 2022
Agriculture, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Other News, Podcast, Research, Risk Management, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: APRIL 21 – 28

Corn continues to move higher as planting has gotten off to a slow start in the US and Brazil’s safrinha crop is facing drought conditions, shrinking their crop. The wet and cool forecasts remain into May for the north and eastern corn belt which will make it unlikely to see much planting progress in those areas. The rain will be welcome in the western corn belt that has been dry and making slow progress in planting, but the rain will be welcome for the soil even if it slows planting for a day or two. The ongoing conflict in Ukraine continues to decimate their infrastructure as Russia destroys ports and has seized stored corn to sell as their own. China was a buyer of corn this week and will hopefully continue to show up on exports as demand from other buyers has slowed. Limits have been increased at the CBOT for some commodities and corn will now have a 50 cent limit starting May 1 from the current 35 cent limit.

Via Barchart

Soybeans had a small dip this week after its nice run higher from the previous dip at the end of March. Soyoil prices continue their move higher pulling beans with it while meal struggles. Indonesia placed a palm oil ban on both refined and unrefined product. The slow start to planting will ultimately roll into affecting soybeans like corn but we aren’t at panic mode yet. The start to the year has been less than ideal when the world stocks need a great year. Beans daily trading limit will move up to $1.15 effective May 1st.

Via Barchart

Cotton

July cotton traded limit up (7 cents) on Thursday to set a new contract high at $1.4768. Export data from last week was better than the last few weeks. Cotton’s problem appears to be a lack of world supply mixed with (so far) not ideal growing conditions in Texas. Forecasts for rain in Texas are very welcome but will need to be widespread and a large amount to help the drought. (See drought map below)

Dow Jones

The Dow was down this week as volatility continues to be in the markets as earnings continue to come across with some large companies getting crushed and others posting solid numbers. Tech companies have had a good week after getting run over the past couple months. This may not be the bottom for tech but it is nice to see some good numbers and some support.

Via Barchart

Drought Monitor

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

Podcast

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

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

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

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].

26 Apr 2022
Agriculture, Grain rcmagserv 0 comment

How Grain Producers Continue to Expand with The Growing Population

The agriculture industry in the U.S. has continued to grow over the last century along with the world wide demand for U.S. agricultural products. While the typical consumer probably does not realize how big the American agriculture umbrella is, it is essential to acknowledge all the individuals that play a role in feeding the U.S. and the world. The U.S. agriculture industry employs over 20 million Americans and hundreds of millions of people worldwide. There are over 2 million farms across the U.S., ranging from small to thousands of acres, with the average American farm being 435 acres. While many areas of agriculture contribute to the U.S. GDP, about 1% of the U.S. GDP comes from farming.

1% of U.S GDP may sound small; however, in 2021, the U.S. exported $177 billion worth of U.S. farm and food products to the world. The U.S. farmer plays a vital role in feeding the world right now, and that role will continue to expand as the world population grows. For more interesting facts on the U.S. agriculture industry, click here.

Production in the U.S

The traditional area for the largest US agricultural product production is the Midwest for corn and soybeans; however, there are many other states that are highly productive for these same commodities, including the high plains of Kansas and Colorado and the vast prairie lands in the Dakotas.  The U.S also produces many specialty crops i.e Florida for oranges, Idaho potatoes, , etc. In addition, other commodities, like Cotton is grown across the south and into west Texas, while others like sunflowers are grown in the Dakotas and the famous lumber industry in the Pacific Northwest and east Texas. In total, top three U.S. farm products are cattle/calves, corn, and soybeans that span the country.

Thanks in large part to the excellent stewardship of the land as well as improvements already discussed in technology (link to equipment and fertilizer), it is no surprise that the U.S. has also significantly increased its exports over the last 20 years.   In fact, since 1950 the U.S. corn yields produced have increased by 360% and as a result it is no surprise that nearly 30% of all feed grain is now exported (https://grains.org/chart-of-note-u-s-exports-of-feed-grains-in-all-forms-giaf-end-marketing-year-at-nearly-101-million-metric-tons/).  In other words, the US truly feeds the world “today”! .

The U.S. vs. The World

While the U.S. is a significant cog in the world agriculture market machine, it is important to remember that we are only one big piece. Just because we are functioning at our highest level it does not mean that problems elsewhere won’t affect us. What happens in South America while it is winter here can have major impacts on prices in our markets. As we are seeing right now, Russia and Ukraine are both major players in the agriculture and energy markets. It is important to pay attention to production in other countries as they compete against the U.S. for exports in a global market. South America’s rapid rise in the soybean market over the last 20 years shows how vital global production is to watch even when we don’t have seeds.

As we mentioned previously in our What it Takes to Feed The World Series, the global population is expected to grow by 2+ billion people by 2050 — world farmers will need to grow 70% more food to feed the growing population. The U.S. will not be able to meet these needs by itself, so growth worldwide will be critical. The increase in corn yields can be seen below, and as you can see, the gains in recent decades will need to continue…is this even possible without more arable land?

 

Threats to U.S. Farmers

The U.S. has farms of all sizes that face unique challenges, but all face one similar challenge, mother nature. While the weather is different in all places, it is the most crucial thing in agriculture production, and unfortunately, it is one of the few things we have no control over. There is a reason you buy crop insurance to manage the risk of the uncontrollable, you can read more about that here, but it is also why there are so many types of insurance that relate to weather events.

Each farm faces its own unique challenge, but the ultimate goal is to stay profitable and farm for years to come. The price risk associated with farming changes every year and is different for each farm/producer as expenses, yields, and income needs are different. It is vital to understand this as cookie-cutter plans to marketing may work for one farm or one region but can lead to failure in others.

 

RCM Ag Services and Producers

RCM Ag Services is a full-service risk management and crop marketing advisory firm. Our team specializes in risk management strategies to help producers hedge their risk and maintain profitability. We discuss strategies that fit your marketing plan and fit within your risk profile to help maintain a comfortable relationship.

We help farmers with cash sales, hedging, breakeven and offer speculative trading accounts. We believe the farm operates best when you know that someone is keeping up with the market and lets you handle producing a great product. Working with people throughout the agriculture industry allows our team to stay plugged in to all areas of importance.

 

FEEDING THE WORLD IN THE FUTURE

Bringing awareness to how the agriculture industry is vital to feeding the rapidly growing world is pivotal as we continue to face unprecedented challenges in global food security. However, there is a silver lining. We already know what must be done; it is figuring out how to do it that could be problematic. The world must unite and understand that each of these areas highlighted in the infographic is very complex, employs millions of people worldwide, and is vital to the growth of the agriculture industry as well as producing the necessary food for the future.

 

 

 

 

20 Apr 2022
Agriculture, Market Commentary, Research rcmagserv 0 comment

A Closer Look into the Evolution of Farming Equipment

Advancements in heavy equipment play a critical role in ensuring that agriculture and food production is sustainable for the world. From horses pulling wagons to modern-day combines, the evolution of farm equipment has played a vital role in the agriculture industry.

The development in technology has not only helped speed up the overall farming processes, but farming equipment is essential for decreasing the amount of manpower needed for each harvest season and increasing production overall.

First, let’s recognize a few of the pioneers and inventors of farming machinery:

  • In 1794, Eli Whitney created the cotton gin, which separated seeds, hulls, and other unwanted materials from cotton after it had been picked.
  • In 1831, Cyrus H. McCormick developed the first commercially successful reaper, a horse-drawn machine that harvested wheat.
  • In 1837, John Deere invented the self-polishing cast steel plow, improving the iron plow.
  • In 1842, the first grain elevator was built by Joseph Dart.
  • In 1878, a New Jersey woman named Anna Baldwin invented the first suction milking machine, which revolutionized the industry.

 

It’s incredible to see how far the evolution of these essential pieces of equipment has come, and be sure to read more in-depth descriptions of these early inventions here. We also had the opportunity to sit down with the late Bob Miller, who also discussed the various items used on his family farm in Wisconsin from 1927-present day in this recently released whitepaper, Then vs. Now: Memoirs from the Miller Family Farm; check that out here.

And thanks to these early inventions, today’s modern agriculture has adopted tools and digital technologies that have significantly improved the way farmers can manage their crops and fields. Here are five technologies that have been added to machinery that has made farming more efficient and safer:

  1. GPS software and GPS agriculture
  2. Satellite imagery
  3. Drone and other aerial imagery (Check out our podcast with Dr. Scott Irwin where we discuss the biggest evolution in crop agriculture here)
  4. Farming software and online data
  5. Merging datasets

 

The introduction of satellites into the world of agriculture has helped make farming decisions easier and has helped make farming more efficient. Satellites allow tractors to be more efficient with GPS technology to help plant and spray crops more precisely. Satellite imagery is also now used in the USDA’s research when putting out yield estimate reports by using satellite imagery to try and estimate the health of the crop.

Technological updates in drones and other intelligent software have allowed farmers to use artificial intelligence to help make decisions for the crop as the year goes on. Agriculture companies have developed apps that can gather hundreds of data points for every field someone farms to help farmers make time-critical decisions much easier. Artificial intelligence can make decisions in seconds that used to take hours of looking over data from the soil composition, seed variety, to when to spray the chemicals.

Not only does this information help each field for that year, but it helps farms become more sustainable and produce more consistent crops year after year. Reducing carbon emissions by being more efficient with tractors, combines and planters will help farming be “greener” moving forward. AI also helps benefit both farmers and the farming process by reducing runoff of chemicals and fertilizers as well as staying in the soil.

The continued development of technology and equipment is crucial now, more than ever, to help farmers produce the needed quantities to feed the world. With a global population projection of 10 billion people by 2050, agricultural production will need to increase by at least 60%, according to the Food and Agriculture Organization (FAO) from current levels. Will it be equipment, seed / chemicals, or simply mother nature that helps us reach a 200 bu per acre corn crop in the years ahead??

Be sure to download how equipment works to feed the world in our infographic here.

 

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 us today to speak with an ag specialist at 888-875-2110!

 

 

21 Feb 2022
Agriculture, Corn, Crop Insurance, Grain, Livestock, Meats, Soybeans, Wheat rcmagserv 0 comment

Funding Food To Feed The World

How Financial Institutions and Insurance Companies Play an Essential Role in Feeding the World

The cost of farming has grown over the years, which means financial institutions are amping up their reviewal process for loans and increasing insurance deductibles for protection to reduce their loss risk. What does this mean to supporting food production for the world? Well, as part of our “What It Takes To Feed The World” series, we are diving into critical agriculture sectors and bringing awareness to their roles in the food production cycle.

Financial institutions and insurance companies are the starting point in the process and are essential in providing the necessary funds to farmers on through to commercial entities. For farmers, they help finance EVERYTHING from the seed and chemical to hedge lines for farmers to help manage their price risk and everything in between. For commercial and end user entities, financing includes loans to build and maintain infrastructure and logistics to short term bridge loans to buy directly from farmers on to their own hedge lines of credit to support carrying of positions both pre and post harvest.

What financial and insurance options are available to the agriculture industry, and how are they beneficial to farmers, commercials, and end users? We’ll discuss the answers to these questions and more below.

 

Farmer Direct Loans

Farm direct loans are loans that the government makes available via the Farm Service Agency, while banks provide similar farmer direct loans. In 2021 the FSA reported loan obligations of $6.67 billion. Meanwhile, in 2020, U.S. farm banks loaned $98.6 billion. The American Bankers Association defines farm banks as banks whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average. These amounts show just how much money is needed to produce the U.S. crop each year before farmers even harvest and sell the crop. These loans range from rent payments to fertilizer costs to machinery. But farm banks aren’t just offering loans to the agriculture sector. In 2020 total bank lending reached $174 billion in farm and ranch loans (including the $98.6 billion). These banks play a significant role with billions in small farm loans and even microloans. Small farm loans are less than $500,000, and microloans are less than $100,000. These two categories alone totaled over $55 billion in 2020.

 

Hedge Margin Lines

Banks also help finance hedge margin lines to help farmers manage their price risk. By financing the hedge lines, banks allow farmers to place hedge positions in a brokerage account, protecting against adverse price movements that could lessen the value of their crop. When banks loan out money, they expect to be paid back; hedge credit lines are a tool banks use to help support the farmer being able to do so.  If your bank is NOT willing to extend a hedge line – please give us call!

By financing hedge margin lines, banks support the farmer and themselves. With loans comes default risk and hedging is one tool to help mitigate the price risk that ultimately will be how the farmer pays back the loan.

 

Banks and the Rest of the Sector

There’s no question that banks are involved in the food production supply chain. When you think about it, commercials, end-users, and other units that touch grain utilize bank loans to enhance their businesses. Like feed yards and elevators, end-users use banks to improve their infrastructure by adding more storage or drying systems, using short-term loans to purchase grain and make other improvements to their business. These improvements ultimately improve the efficiency of the entire system and potentially lead to  reduced costs of the final product, which helps the end consumer, people. Just like improvements to city and towns infrastructure are necessary, through the support of bank financing, these improvements are necessary to the health of the agriculture industry’s infrastructure.

Farming is not getting any cheaper, and more capital is required to produce excellent crops year after year. Banks’ loaning capacities play a major role already, but if we are going to keep up with growing demand in a growing world, their role will be even more critical going forward.

 

Crop Insurance

Crop insurance brings continuity to the industry year-over-year as the ups and downs of weather and prices can cost farmers millions of dollars if unprotected. There are two types of insurance for major field crops: yield-based, which pays an indemnity (covers losses) for low yields, and revenue that ensures a level of crop income based on yields and prices.

Insurance offerings and prices vary on where you are located and your land, but like other forms of insurance in your life, it is better to have it and not need it than need it and not have it. While the listed above are the main types of insurance, others can be purchased, like drought insurance for pastureland and hail insurance if your crop gets damaged by an ice storm. These are more specific to your geographic location but play an essential role.

Like banks, insurance companies help with the continuity of the agriculture sector. These companies along with government subsidy programs, provide the opportunity to continue farming when disaster strikes and threatens the financial stability of a farm.

 

How RCM Ag Services Partners Financial Institutions & Insurance Companies

For our Farmer Direct customers, RCM Ag Services partners with banks and insurance companies to provide our mutual customers daily expert market knowledge and advice. We are firm believers that the long term health and growth of our local farming communities requires a team approach that starts with the farmers and their banking and insurance teams.

For our commercial and end user customers, we are focused on evaluating profit margins and the cost of capital for managing the current and futures market risks.  Our Ag Services team is working directly with lenders, 3rd party credit suppliers, as well as USDA government programs to support the long-term financial health of the commercial business sector.

Along with market knowledge, our brokerage services allow us to establish hedge accounts that banks can fund with a credit line, as discussed above. Our brokers have over 150 years of combined experience in the market that helps them provide hedge advice that is customized to each operation, not cookie-cutter advice. Take advantage of these benefits and call one of our knowledgeable ag specialists today at 888-875-2110 or email [email protected]

 

25 Jan 2022
Agriculture, Market Commentary, Podcast rcmagserv 0 comment

The Future of “Feeding the World” with Ag Technology featuring Dr. Channa Prakash

A special guest joins us for this episode of The Hedged Edge, who is well known for his many titles, which include Doctor, Editor-in-Chief, Dean, and Chief Academic Officer, just to name a few. Dr. Channa S. Prakash, Dean of the College of Arts and Sciences (CAS) at Tuskegee University, has served as faculty since 1989 and is a professor of crop genetics, biotechnology, and genomics. He is also well recognized for mentoring underrepresented minority students.

Tune in as biotech guru Dr. Prakash discusses everything from Alabama football, genetics as one of the most extensive agricultural advancements, the most significant risk factors to feeding the world over the next 30-50 years, plus everything in between. And as a bonus, we find out what sport he would be interested in playing if he went professional.

Highlights from this week’s episode include:

  • The science that has provided our farmers with better varieties of crop lines by using some of the most sophisticated technology on Earth
  • Why producing crop plants with a much gentler footprint on the natural resources will help feed the growing population
  • How 75% of the world’s patents in agriculture gene editing are coming out of China
  • Understanding that trying to impose restrictions on our ability to grow food can be a considerable risk to agriculture and more!

 

Quick links from the episode:

  • Follow Dr. Prakash on Twitter @AgBioWorld here
Listen or watch:
27 Dec 2021
Agriculture, Corn, Market Commentary, Podcast, Research, Soybeans, Wheat rcmagserv 0 comment

What’s Driving the Grain Markets Heading into 2022?

The 2021 U.S. grain crop has the potential to be one of the largest on record. Where did all the yield come from, what areas were the hardest hit, and why on God’s green earth are grain prices still so high?
Today, we are joined by several RCM Ag Services grain markets experts from around the country to catch up on a post-harvest update and share an outlook for production and marketing in each of their respective regions for the remainder of the 2021 marketing season and the upcoming 22 crops.
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Listen or watch:
27 Jul 2021
Agriculture, Corn, Cotton, Crop Insurance, Grain, Market Commentary, Market Updates, Options, Podcast, Research, Risk Management rcmagserv 0 comment

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 Director of Agriculture products for the CME Group and is responsible for management of the company’s global agriculture commodities business – including grain, oilseed, livestock and dairy risk management products.

 

Find the full episode links for The Hedged Edge below:

17 Jul 2020
Agriculture, Corn, Dow Jones, Other News, Soybeans, Wheat rcmagserv 0 comment

Ag Markets Update: July 11 – 17

Despite one of the largest single export sales to China ever, prices for the week fell. After some welcome rains in the past week in areas that were dry, favorable outlook during pollination has the potential to help make this crop large. Ultimately, as yield potential continues to look high, big bumps in corn are looking slim unless there is a surprise in forecast changes or export sales. The crop conditions continue to look strong as you can see in the chart below. We are not near/at record conditions, but still have very strong numbers at this point in the year. A dip in condition would factor into price movement as well, but don’t don’t plan on that for a big boost towards the end of the month.


Soybeans had a flat week price-wise as steady sales continued to China and forecasts didn’t change too drastically. We started out the week with some prices drops, but a solid midweek bounce helped get back to flat as we head into the weekend. Look for any big forecast changes or unexpected purchases to be the only thing to move bean prices in the near future. As world demand has seen an uptick, the U.S. may find more buyers as South America has been so busy selling up to this point, they may have trouble fulfilling any additional large exports.

 

Large purchases from China gave Wheat a big boost halfway into the week. Wheat did have to give a good chunk of that boost back the following day due to a lack of confirmation on purchases, but any Chinese purchases at this point are beneficial to the markets as other Wheat growing countries are seeing lower yield numbers. As you can see below, markets are well off the lows that we set a few weeks back as Wheat has made a solid rebound. Just like with Soybeans, more confirmed purchases, or any purchases for that matter, would be beneficial to U.S. Wheat.

 

Dow Jones
The Dow saw positive numbers overall for the week with a few days of solid gains and small losses. Americans continue to keep their eyes on places that are reopening and spikes in major metropolitan areas. Retail spending was up +7.5% last month, but some experts think we may see that shrink as some states have rolled back their opening phases where cases have spiked. President Trump wants schools to open this fall as he sees that as a way to get more people back to work, so the rolling out of back-to-school plans be an important factor on the economy heading into election times.

Disclaimer

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