Tag: crude oil

01 Apr 2022

AG MARKET UPDATE: MARCH 24 – 31

A bullish USDA Prospective Plantings report for corn saw both old and new crop corn getting a boost on Thursday. The USDA sees corn-planted acres for all purposes in 2022 at 89.5 million acres, down 3.87 million from last year and well below the average trade estimate of 92 million. Several factors might have played into this number but going from 92 million acres at the USDA Ag Forum to this number a month later is very interesting. Input prices and supply chain woes likely played a major role in the USDA predicting more bean acres than corn as the cost per acre to raise corn will be very high this year with the risk of not receiving all inputs in time. On top of the fallout of the war in Ukraine, this lower number should see tightening on the world balance sheets even with a record yield this year.

Via Barchart

Soybeans had a bearish report as the USDA came out with 91 million planted acres in the US for 2022. This would be a record for planted acres and 4 percent higher than last year, with planted acreage being up or unchanged in 24 of the 29 estimating states. Fewer inputs are needed per acre to grow beans than corn played a major role in the shift in acres year to year. How the market trades in the next few days will be interesting to watch as 91 million is a lot of acres, but the world needs it, so will it actually be enough?

Via Barchart

Wheat remains vulnerable to Ukraine and Russia news while also figuring out its value in the world market. Wheat acres came in at 47.351 million, lower than the pre-report estimates — 2022 winter wheat planted area at 34.2 million acres and (23.7 million HRW, 6.89 million SRW, 3.62 WW) 11.2 million acres of spring wheat. China’s poor crop and the issues with the U.S. crop seem to be priced into the market possible, but for the time being, Russia’s war in Ukraine will be the market moving news.

Via Barchart

Cotton made another jump higher this week before falling following the report. Cotton acres came in at 12.2 million acres, up 9% from last year. Many growing areas have been dry this winter and could use a spring rain to help improve planting conditions. World demand is still present, so the US will have buyers if they can produce a crop. The old and new crops have been over $1 for several weeks now, making it easier to plant than when it was in the 50 cent range a couple of years ago.

Via Barchart

Crude continued its move lower this week with a couple of large intraday ranges. The Biden administration announced that it would release 1 million barrels of oil a day from the Strategic Petroleum Reserves to help fight higher gas prices. The big dip came from rumors of progress in peace talks in Ukraine that seemed incorrect as the conflict continued. The Biden administration also wants to make companies with leases on federal land “use em or lose em” but that would take months to years to go from 0 production levels. When Democrats want to shift to EVs and other “green” energy, it is hard to see why companies invest capital when that party wants to get rid of their dependency as fast as possible.

Via Barchart

Dow Jones

The equity markets fell slightly during the week due to Thursday’s fall into the close of trading. The 2/10 yr treasury yield inversion has been the main talking point this week as it could be a signal of a recession. While it does not always mean there will be a recession, we have not had a recession without that happening, even though it is usually over a year later. Q1 ended this week after a few months of losses, volatility, confusion, and inflation, and it is hard to see it calming down anytime soon.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand heading into April compares to last year.

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 blawrence@rcmam.com.

 

04 Mar 2022

AG MARKET UPDATE: FEBRUARY 24 – MARCH 3

Corn made large gains this week following wheat, but not with the same panic. While Ukraine is a major corn exporter, it is not on the same level of wheat. Corn’s moves will be similar to wheat as the news from eastern Europe, and war will be problematic for the world balance sheets. While it has not moved with the same vigor as wheat, the $1 gain in the last eight trading days shows the potential fallout from this spooks the market. It is hard to tell how many acres will be lost this spring, but it is estimated that only 60% of corn seed is on farms. How likely is it the rest will make it to the farms? We cannot be sure, but it certainly won’t be much more if the conflict drags out. We are still in an inflationary environment, and fund money is very much in these markets, so when they decide to take profits, we will see the same volatility we have of late.

Via Barchart

Soybeans gained on the week but barely when compared to corn and wheat’s gains. Corn and wheat are major exports for Ukraine and Russia out of the black sea area where beans are not, so they are not immediately affected. South America’s weather outlook has improved but will not turn around the crop too much after its rough start. Soybeans will benefit from the corn and wheat stories, but they also have their own story to follow in South America.

Via Barchart

The soft red winter “Chicago” wheat is in full-on panic mode, as you can see from the limit move days in the chart below. The war in Ukraine does not seem to be ending soon, and the sanctions on Russia will last and hurt their economy. Eventually, the market will figure out what fair value wheat is, but for now, with the potential for Ukraine to not do their regular care of the crop, it is on a ride. If Ukrainian farmers cannot apply the fertilizer they usually do, the crop will shrink by several metric tons and could be double digits. Ukraine is the 5th largest exporter of wheat globally; Russia is number 1; this conflict will have major ramifications in the wheat market for the foreseeable future.

Via Barchart

Dow Jones

This week, the equity market made decent gains as they have had a mixed trade the last few days. Jerome Powell said this week that it is all but a certainty that rates will be raised 25 basis points in the March meeting, lower than the 50 thought a few weeks ago before the war with Russia and Ukraine. Inflation has been bad the last year and will not improve soon with higher commodity prices across the board and Russian sanctions presenting a problem for some trade. Look for investors to focus on U.S. equities for the time being, as Europe and emerging market countries use Russia for a lot of their energy and could see issues with production and energy crunches.

Via Barchart

Crude Oil

Crude moved higher this week as sanctions against Russia have made the future of Russian oil exports cloudy. The U.S. purchases roughly 600,000 barrels of crude from Russia a day, which does not help our already high gas prices. Crude still has room to go higher as ramping up production to make up for any lost oil takes months to do. If this conflict drags out, we will see elevated fuel prices through the summer and be a larger expense on the farm than the last few years going back to 2014. The 10-year chart below shows the current levels to 2014 to help you budget if you did not hedge your fuel prices.

Via Barchart

Podcast

Tune in as biotech guru Dr. Channa S. 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.

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 from China. Understanding that trying to impose restrictions on our ability to grow food can be a considerable risk to agriculture. Listen to hear about these topics and 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 blawrence@rcmam.com.

04 Feb 2022

AG MARKETING UPDATE: JANUARY 27 – FEBRUARY 3

Corn suffered small losses this week, going a different direction than beans. Private estimates of the South American crop are consistently lower than the USDA’s last estimate, and we should see an adjustment on next week’s USDA report. The Chinese’s cancelation of 380,000 tonnes of corn was a drag on the market on Thursday. One cancelation is not the end of the world; it happens, but should we see a trend develop that could damper the bull sentiment right now. The driest areas of South America will continue to dry over the next couple of weeks, hurting their crop in those regions. Private estimates think that Argentina’s corn yield could be 43.5 million metric tons, while Brazil’s could be 112 MMT. These are well below the last USDA report’s numbers, so next week will be interesting to see how much the USDA adjusts their estimates.

Via Barchart

Soybeans continued to move higher this week as the South American weather issues will probably significantly impact the soybean crop. The continued heat and dry weather will continue to stress the crop like corn. The market can’t go up every day, no matter what it seems like; the closing off the highs the last two trading days suggests the market may want to take a break until there is more news. Brazilian producers are still not selling, which has interior cash bids competitive with exporter bids. With this playing out in Brazil, the U.S. could see some more business as a result. Especially if China steps in and makes purchases out of the Pacific Northwest, keep an eye on drought conditions around the U.S. even though we are well out from planting as we have seen drier than normal weather in some growing areas to this point of the year.

Via Barchart

Dow Jones

Equities have made a strong rebound off the lows until Thursday’s struggles following some bad earnings report lead by Facebook’s (now Meta) major fall. Amazon posted a good quarter which may give investors some relief that Facebook’s problems were their own and not market wide. The bounce was nice to see from an investors point of view as a correction seemed to be done, but guidance from many companies has not been as growth friendly looking forward as the last year. Volatility may stick around for a while so do not expect the markets to recover as quickly as they fell.

Via Barchart

Crude Oil

Crude hit $90 this week for the first time since 2014, while Natural Gas also rose to over $5.500 before dipping back below $5 this week. Crude continues its move higher as OPEC+ does not plan to expand production while consumption remains strong. This is a classic higher demand without more supply price raise over the last two months, and many analysts see $100+/barrel as a possibility this spring. Higher fuel prices will affect farmers’ bottom lines as fuel expenses and shipping for other chemicals and fertilizers will be much higher this year on top of higher input costs. (5-year chart below for reference)

Via Barchart

Feb USDA Report

The February WASDE report will be released next Wednesday, February 9. This will be the primary driver of the week after weekend weather has its say in the market on Monday. This is not usually a major market mover, but it never hurts to be well-positioned and ready before a report.

Podcast

Tune in as biotech guru Dr. Channa S. 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.

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 from China. Understanding that trying to impose restrictions on our ability to grow food can be a considerable risk to agriculture. Listen to hear about these topics and more!

 

Via Barchart.com

 

 

03 Dec 2021

AG MARKET UPDATE: NOVEMBER 18 – DECEMBER 2

Volatility was the name of the game this week as every market experienced it from, grains to equities. Corn partook in the excitement, as you can see from the chart below. Important to note is following the small rally in the past couple of days to get back to the levels we saw before Thanksgiving. Wheat was a big winner Thursday and pulled corn with it on the intensifying issues with Russia and Ukraine. If wheat rallies, expect it to pull corn with it even on limited corn news. The La Nina pattern continues to form in South America as southern Brazil remains dry, and forecasts have that continuing. Another non-corn-specific factor to keep an eye on will be energy prices, as ethanol production will depend on how the omicron variant will/could affect US travel into the winter and holiday season.

Via Barchart

Soybeans, like corn, saw a bounce the last couple of days to get back to close to the range we were in pre-Thanksgiving. The bounce has brought us back in the range we were trading for most of October, which seems like a good place for the market to hang around when there is a lack of news. Exports continued but were on the lower end of expectations this week, while soybean meal and oil were as expected. If beans could close this week over the 20-day moving average, that would be supportive for bulls who are looking for good news. As harvest is wrapped up, all eyes turn to South American weather and their crops this year.

Via Barchart

Crude oil has sank following the Thanksgiving holiday as concern over the new Omicron variant, and its impact on demand hit the market. While these concerns are valid as much is still unknown, the largest problem that seems immediate to demand will be air travel and international travel causing, less jet fuel demand. As of right now, it does not appear to be worrying many Americans, but as more cases are found, we will see how it will affect demand. OPEC+ countries also announced they might cut output if demand falls due to the virus, leading prices back higher.

Natural Gas prices have also faltered this week as a warmer U.S. winter is expected to occur, requiring less NG for heating. Diesel prices have also fallen a lot this week following the Omicron variant news and presents farmers with an opportunity to hedge their fuel needs for next year.

Via Barchart

Dow Jones

The Dow experienced a lot of volatility this week as news of the Omicron variant in the U.S. and more places worldwide spooked some investors. The reports are that it only has caused mild symptoms, which is good, but the reaction was not of fear of the virus itself but how the governments will respond with potential lockdowns and travel bans soon. On Thursday, the strong bounce-back shows that investors are still eager to get in the market, so any large pullbacks will be met with buying if it is seen as a jerk reaction, but any longer lasting weakness could be seen as a correction. The down-trend of the last week has made some investors worried and moved some to the sidelines while we see what happens. Powell will stay as head of the Fed and said they might start tapering and raising interest rates sooner rather than later as inflation does not appear to be transitory.

Via Barchart

Podcast

For the past year, commodity prices have perpetually soared and continue to trend higher. We’re diving into the fertilizer forecast with a unique guest, Billy Dale Strader, a branch manager for Helena Agri-Enterprises in Russellville, KY., who is truly at the epicenter of the rising fertilizer prices.

Billy Dale planted his agriculture roots on his family-owned farm and has managed regional seed and chemical sales at Helena for the past decade. In this week’s pod, we tackle the big question for farmers and ultimately end-users — is the impact of higher-priced inputs, like seeds, chemicals, and fertilizer, on the supply and demand for the major U.S. crops? Listen or watch to find out!

 

 

Via Barchart.com

04 Jun 2021

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 a news driven market. One day weather was the main price mover and another outside forces such as metals and the USD pulled markets down across the board. Old crop corn export sales this week were strong coming in at 531.1 tmt and new crop sales were 439.5 tmt. Both of which are solid numbers where old crop sales were better than expected while new crop were within expectation.

Via Barchart

Contrary to Corn, Soybeans made gains on the week. Planting was seen as being 84% completed at the onset with no crop conditions being reported just yet. World veg oil prices rallied during the week pulling beans up with it while corn struggled. With US exports to China lagging in recent weeks, the bullish stance on beans continues to be robust.  Should buying resume, any and all purchases will help the export numbers and further be supportive for the market. This week’s exports were within expectations for both old crop and new crop with new crop leading the way with 180.3 tmt.

Via Barchart

Crude oil continued its gains of recent weeks reaching the highest price in 2 ½ years. The demand for gas continues to grow as lockdowns ease and summer travel, both by cars and air, begins to ramp up. OPEC announced they will up production again in July.  While a bearish on the surface it would seem additional increases will be needed to slow this bull.  Optimism about Europe’s reopening along with the continuation of good news in the US on covid vaccines and reopening of states has been the main driver. US crude oil inventories were also lower this week than the 5 year seasonal average showing the demand is there.

Via Barchart

Dow Jones

The Dow gained on the week as it strung together several days of small gains with only small pullbacks. The craziness of the reddit trade returned this week with $AMC, $GME and $BB having wild bouts of volatility. Other indexes finished lower for the week as Nasdaq struggled on Thursday.

JBS

JBS was the victim of a recent cyber attack that caused them to have to shut down many plants. All were up and running by the end of the week but between this and the Colonial hack we may begin seeing more of these targeted attacks effect US consumers.

Lumber

Check out our recent post about the lumber market and what all has been going on. Lumber has leveled off here recently but it is still well ahead of where it was before the run up.

Podcast

Check out our recent podcast with Dr. Greg Willoughby: We’re talking with Greg in the new episode about being a “plant doctor”, weather patterns, GMO & organic produce, crop history, technical advances, level 201 education on agronomy, the agronomy equation, Helena Agri, soil biology, American v European agriculture, Greg’s early background in livestock, and the advancement of native plants to modern produce.

https://rcmagservices.com/the-hedged-edge/

US Drought Monitor

The map below shows this week’s drought conditions across the US. Parts of southern Kansas and northwest Oklahoma got relief this week while parts of North and South Dakota may receive much needed rain in the next week.

PRICES

Via Barchart.com

 

21 Dec 2020

Ag Market Updates: December 12 – 19

Corn followed beans up this week as exports continue to roll. China continues to be a buyer of US corn and continued La Nina weather in South America are helping pull prices up. Corn will continue to go as soybeans go (as usual) so any positive soybean news is also supportive for corn prices. There continues to be upside in the market as fundamentals continue to bullish with the downside being a change in weather for South America. Corn has been slow and steady and will continue to be with exports being the main news.

Via Barchart

 

Soybeans finally broke through the $12 mark this week as world demand continues to drive prices. China potentially switching bean cargoes from Brazil to the US on shipping delay concerns (Argentina port workers strike) were supportive news as well as continued South American weather concerns. Southern Brazil and Argentina look to be dry into the end of the year while the rest of Brazil will get enough rain to keep it steady. As exports continue to be strong and on the high end of expectations it does not look like bean demand is going anywhere. Bean sales have reached 90% of the annual USDA forecast with 8 ½ months left in the reporting year. Until South American harvest gets rolling US beans look to continue to benefit from the export demand. With the magic $12 threshold being past we could see this run continue.

Via Barchart

 

Dow Jones
The Dow gained on the week as vaccines rolled out across the country while the current COVID wave is seeing new records every day. Congress continues to negotiate a stimulus bill as the year comes to a close. Many investors see 2021 as ripe for growth and still think there is time to get in to take advantage of a post Covid-19 US even if you missed the run up to 30,000 from the March lows.

Crude Oil
Crude Oil has rallied back to pre-lockdown numbers this week as it got back to $49/barrel. As fuel consumption has slowly been growing a second round of lockdowns could lead to over supply problems if drilling is also not cut back.

US Dollar
The US dollar has continued to fall as it is again seeing value not seen sine early 2018. A low USD helps commodity prices and cotton more so than others as we have seen cotton’s recent run up.

Weekly Prices

Via Barchart

08 Oct 2020

AG MARKET UPDATE: OCTOBER 3 – 9

Corn followed beans higher this week as exports continued and Brazil’s weather is still questionable as their season starts. Corn harvest in the US is 26% complete as favorable weather looks to allow for harvest to continue across the country. As Chinese buying continued following holiday, markets are keeping an eye on their purchases as the Chinese government changed laws in what can be fed to hog herds as they continue to recover from ASF. By not allowing for swill (food waste and garbage) to be fed to hogs anymore the demand for corn and meal for feed looks to increase, but it is hard to tell how much swill feed will need to be replaced. Ethanol demand has remained lower than normal as the pandemic continues, but with lower demand has also lowered production. The lower production has lead to tightening in stocks to their lowest level in 8 years. If/when ethanol demand rebounds, look for a boost in corn purchases for ethanol use to replenish stocks and meet demand. Keep an eye on the USDA yield estimates on Friday.


Via Barchart

 


Soybeans kept the rally going this week on weather concerns in South America and exports continued in large amounts. South America remains in a dry pattern that could turn into a drought if they do not get the much needed and forecasted rain in the next couple of weeks to get the beans in the field in some major growing areas. Harvest continued across the US this week as harvest is seen 36% complete as favorable weather across much of the US has allowed farmers to get off to a great start. As China came back from holiday the buying continued as feed demand in China has started to pick up despite herd sizes only being about 65% of what they were before ASF. Fund buying has also continued this week as funds now are long 1.4 billion bushels (about 10% of the expected world production in 20/21) of beans. Prices will once again be paying attention to the USDA report on Friday but do not expect anything like the last report. As you go through harvest we suggest not storing any beans as the market is currently inverted (Nov prices being better than anything in ’21) showing the market wants your beans now. Not seeing a carry in the market makes it hard to hold the beans when selling the physical and getting long futures if you believe the markets are going higher is an option.

 

Via Barchart

 


Funds continued to get long wheat this week, with some profit taking on Thursday, helping fuel the rally that other grains have seen. Weather problems in other areas of the world are helping markets move as parts of Russia remain dry and the Black Sea area has been dry but is forecasted to get much needed rain this week. Argentina like Brazil has been dry but looks to continue their dry pattern unlike Brazil. Stocks are expected to be lower in the report on Friday from the September report.


Via Barchart

 


Cotton prices rallied this week as Hurricane Delta heads toward the Mississippi Delta. The fact that there is still plenty of time for another storm before harvest after Delta worries farmers that one storm may be fine but another would present major issues. Cotton has seen a steady rise in prices since the lows back in April. Exports were good this week as there were little cancellations and strong sales to Vietnam.


Via Barchart

 

Crude Oil
Crude saw a boost this week as Hurricane Delta has shut down production in many parts of the Gulf of Mexico. This is typical of prices whenever a hurricane is in the gulf as reactions to what may happen is usually worse than the outcome.

Dow Jones
The Dow continues its bounce back despite back and forth tweets from Trump and Pelosi regarding a new relief bill and what it should look like. Big tech stays in the news as Amazon and Facebook are continuously being looked at for anti-trust violations by a bipartisan group, not much is expected to come from this but worth noting.

World Weather
Brazil has been dry causing some delays in planting but some rain this week and cooler temperatures are in the forecast so markets will keep an eye on any changes there. Hurricane Delta barrels toward the US as farmers in the south look to try and get their crops out ahead of any rain that could cause damage, especially to cotton in the Delta.

 

Via Barchart.com

12 Jun 2020

Ag Markets Update: June 6 – 12


The 2020 June USDA Crop Report came out Thursday and contained little surprise for the corn market. The report did trim off some ending stocks from 19/20 as they adjusted for the corn that was lost in ND that was never harvested until this spring due to weather problems. Corn seems to have little news to drive it significantly higher in the near term as there is favorable weather in most areas that have corn already growing. We should keep our eye on the lack of rain in the 7-14 day window as an early lack of rain could effect pollination in areas. The USDA put 20/21 corn price at $3.20, the same as last month, and $3.60 for 19/20. The stocks numbers can be found on the chart at the bottom but, like we said, little surprise. Funds continue to hold large short positions.

 


Soybean prices stayed steady this week after gains over the past couple of weeks. Continued confirmed Chinese buying along with sales to “unknown buyers”, more than likely China, have given beans the support they need. The buying has slowed down some but as long as decent purchases keep coming from China that will support soybeans. Like corn, the USDA report was pretty much a non-event for beans despite some bullish news. The ending world stocks for both 19/20 and 20/21 were both lowered enough to see some slight gains in bean prices before coming back down to finish trading Thursday about unchanged. The rally over the past couple weeks helped keep the bullish news from moving the markets much as most of the news seemed to be factored into the price already.

 


Wheat has had a hard week, losing over 20 cents in the July contract. The USDA report was definitely bearish for wheat as the outlook for the southern hemisphere 20/21 growing season was bigger. USDA is forecasting a 11 mmt gain in Australia wheat crop and 1.5 mmt gain for Argentina. There are some trade concerns that the Russian wheat crop may be trimmed which would allow for more US wheat exports. The demand for US wheat looks to be strong for the remainder of this year but when the southern hemisphere starts harvest the smaller demand for US wheat should pull prices down. In the short run keep an eye on any weather problems and trouble in Russia as US spring wheat is off to a great start with 82% rated good to excellent.

 


DOW Jones
The Dow Jones had a major selloff Thursday as concern over COVID-19 begins to ramp back up. Cases/hospitalizations in some places have started to go back up the last week. This could be a result of the easing of restrictions but many states who have been open are not showing major changes despite a small up trend in cases. The government earlier this week also admitted they made a mistake, shocking I know, when calculating last week’s unemployment rate. They have admitted they were off by 3% stating it should have been at 16.3% instead of the reported 13.3% that lead to a market rally.

Crude Oil
Crude took a hit on Thursday with the market selloff, as it fell over $3 a barrel. This comes as a result of similar reasons for the fall in the DOW Jones as consumer’ optimism about COVID-19 may be put on hold for a little bit. If consumers do not plan on travelling as much this summer and fall anymore and people continue to not go in the office consumer consumption will stay low.

05 Jun 2020

Ag Markets Update: May 30- June 5

Planting is close to done in most parts of the country with over 90% of corn in the ground. Now the focus will turn to weather as early growing season is an important time. With a tropical depression in the gulf, it makes it difficult to predict future weather patterns as they are constantly changing. One model predicts for a drought type pattern in the southern plains and western corn belt as the tropical storm Cristobal pulls a lot of energy, so we’ll see how that pans out. Corn prices have been steady the past few weeks with few purchases to get excited about and no early problems to the U.S. corn crop. As long as yield estimates for U.S. corn stays high, there does not seem to be many reasons for a rally unless there is a weather event or we start to see large purchases. Ethanol production has remained steady as reserves are starting to go down, which will hopefully lead to more plants opening back up. The chart below is for July corn and you can see the change in the 20 day moving average as it has begun to tick up.

Soybean prices got a boost this week as Chinese buying continued, despite the government telling companies to quit buying many U.S. Ag products in retaliation to Trump’s comments and policies about Hong Kong last week. Despite what people thought would initially hurt Chinese purchases, tensions seem to be cooling between the two countries (for now). A huge week of soybean meal exports helped fund short covering that gave beans a big boost on Thursday. Continued buying from China would be very supportive for beans, but a decline could see a retreat after recent strength. Look for bean planting to continue its good progress over the next week.

Cotton traded above $.60/pound this week for the first time in the July contract since March 16. Rising futures prices with smaller open interest usually leads to a price reversal, which this price move has seemed to follow. With more open interest in the December contract month, look for more volatility moving forward as speculators will look there. We are barely into the start of hurricane season and already on hurricane number 3 forming in the gulf. A long and consistent hurricane season could do a great deal of damage to the southeast Cotton crop. Cotton has always been sensitive to the U.S. dollar, so a weakening dollar the last couple of weeks has been supportive to prices.

DOW Jones

The Dow Jones continues its climb as it topped 26,000 this week. The markets have recovered quicker than many expected to get to this point. As states across the country have opened back up investors have an optimistic outlook for the rest of 2020. Continuing progress on the Covid-19 vaccine and no spikes in positive test results are all good things for the market and overall economy of the US. This will help people get back to work quickly and hopefully minimize the damage of the long shutdowns.

Crude Oil

Crude continues its climb back to normal prices as OPEC is in discussions to continue production cuts for June. Even though the world is opening back up and oil demand will ramp up, drilling needs to happen at the same rate to not create an oversupply. This agreement being extended would be supportive for crude.

29 May 2020

AG MARKETS UPDATE: MAY 23-29

Planting is almost complete across the country as the final reported number was 88% planted this week. The weather outlook into early June is promising for many areas that were delayed in planting to still be able to get their crop in the ground in early June with the exception of parts of North Dakota that will be hard to catch up. With little news in the markets this month, trade has been pretty stagnant. July corn did trade at $3.30 in the July contract for the first time in over a month on Thursday before falling back to $3.27 ½ at the close. If July corn could close above $3.30 for the month of May it would be a very welcome sight after a month of very limited trading range.

(Barchart.com)

 

Soybean planting was estimated to be 65% complete this week, still well ahead of the average for this time of year. Like corn, the weather for the next week is promising for planting progress across most of the country. Purchases from China gave beans a boost early in the week but no follow up purchases have kept the news slow and prices steady. Any purchases from China, as has been the trend, would be helpful to prices along with an easing in political tensions. ASF news has been quiet as Covid-19 has been the big news story, but as China continues to replenish its hog populations that should help purchases in the future. November beans have been trading between $8.30 and $8.55 for most of the last month with $8.50 the current landing spot. While the bulls have been hopeful of size-able Chinese purchases, the reality has been small purchases with much of their purchases coming from Brazil.

(Barchart.com)

Crude Oil prices have had a great rally despite early worries that we would have another bottleneck problem like we did with the May crude contracts for July. As people around the country are going back to their daily lives, in some capacity they are driving again. The rest of this year should see increasing travel by car as people will look to drive to vacations rather than hoping on a plane. See the chart below to see the impressive rebound for the month of May.

(Barchart.com)

DOW Jones
The Dow Jones has continued its surge up as May will post another large gain despite record unemployment numbers. As states have begun reopening, traders are seeing this as promising for the markets as people will hopefully be returning to work. People continue to work from home in many major cities, or have the option to work from home, and will probably continue doing this as the summer goes on until the public feels safe to return to close to normal.

CFAP Relief Package
Enrollment for the CFAP Relief Package began this week on the 26th. If you have not already, reach out to your local FSA office to begin this process to make sure you do not miss out on any opportunity. The CFAP had scheduled payment of 32 cents per bushel from the original CARES Act and a CCC payment of 35 cents per bushel on the lower of 50% of last year’s production or 50% of your unpriced corn on January 15th. That works out to potentially receiving 67 cents on half of last year’s corn crop. The soybeans payment works the same with payments of 45 cents and 50 cents for a potential payment of 95 cents per bushel on 50% of last year’s bean crop. The math is not clear nor why January 15th was chosen, but those are the guidelines. Livestock is also covered in the payment and information on that from the USDA website can be found here. For more information on how to sign up for the CFAP Relief Package, check out this video.