DOW Archives - RCM Ag Services

07 May 2021

Agriculture, Corn, Cotton, Dow Jones, Grain, Lumber, Market Commentary, Market Updates, Podcast, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: MAY 1-7

Corn continued it’s hot run this month with a great week in both old crop and new crop prices. As Brazil’s safrinha crop keeps facing a dry outlook, pressure is mounting on the US to produce a great crop to fulfill world demand. The US forecast is turning wetter for many major growing areas but remains cool for this time of year. The cool weather is not ideal for early growth, but the rain will be welcome in areas facing drought conditions (see map at bottom). There is a rumor of more Chinese interest in new crop which helped propel old crop to end the week. Despite poor exports this week, this news, along with South America’s troubles, have been the market moving news this week. The US corn crop is seen at 44% planted at the start of the week beginning May 3.

Via Barchart

Soybeans followed Corn this week as they also saw strong gains. China’s ASF news has slowed as of late which is good for export expectations to China. The world demand has continued to be strong and helpful to prices in both South America and the US, while US beans remain competitive in the world market even at these levels. The recent wet and colder weather across much of the US is not expected to cause any issues for the soybean crop except maybe pushing planting back in some areas where farmers also must wait to plant corn. 25% of the US soybean crop is seen as being planted for the week beginning May 3.

Via Barchart

The big question right now: What is going on with cotton? Cotton has not enjoyed in the rally in 2021 that other commodities have. The demand has been there, but there are already worries about the 2021 cotton crop. Normally these are a recipe for higher prices, right? The fundamentals would agree as higher comparative prices for other commodities may take away some cotton acres by the end of planting season. The technical side has been cotton’s enemy as of late as they have not been able to make new contract highs, unlike the grains. The world shipping bottleneck does not appear to be getting any better and as the US continues to come out of lockdowns along with other countries demand will only make it worse. This problem needs to be solved sooner rather than later.

Via Barchart

Dow Jones
The Dow was up this week while other indexes were mixed with the Nasdaq and Russel falling. As earnings continue to be reported many of the winners of the last year have posted strong quarters but it appears the momentum behind them have slowed as good earnings have sometimes been followed by selling.

Lumber
Check out our recent post about the lumber market and what all has been going on.

Podcast
Check out or recent podcasts with guests Elaine Kub and Kyle Little. Elaine and Jeff discuss grain markets and trading grains while Kyle helps give insight into the Lumber markets and what has been going on.

Listen with Kyle:

Listen now with Elaine

CME
CME Group announced this week that it will not re-open its trading pits that were closed last March at the start of the pandemic. The Eurodollar Options pit will remain open. See the full press release here.

US Drought Monitor
The map below shows the current drought conditions throughout the US as planting continues across the country.

Weekly Prices

Via Barchart.com

30 Apr 2021

Agriculture, Corn, Cotton, Grain, Livestock, Lumber, Market Commentary, Market Updates, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

AG Market Update: April 24-30

Volatility was the name of the game this week as many days saw wide trading ranges on both sides of unchanged. Looking at the chart below you can just how wide ranges the last few days have been. Despite the volatlity, the May contract settled squarely within the range as of Thursday. This volatility came about as we’ve faced a short squeeze on the front month May contract. Coming into the week, there were nearly 200,000 open contracts, as of this morning there are only 12,500 – presumably many were on the short side and needed to cover.

Regardless of what has caused the rally – higher prices is GREAT for the American Farmer!

For the July contract and new crop Dec, the markets followed the May higher this week and most April as South America’s struggles with drought conditions begin to be seen in yield estimates. Any rain after May 10^th probably won’t be able to add must help this late in the game. As expected, exports were good this week but that has become the new normal. The epanded limits coming next week along with higher prices means we should probably expect volatility to hang around.

Via Barchart

Soybeans had small gains on the week as they also traded in wide ranges in the May contract in addition to future months. The short squeeze has end users scrambling with physical delivery coming up. Along with beans rallying, we have seen basis improve in many areas as buyers try get what is left out of farmers bins. A growing consensus among traders is that continued strong US cash bids indicate that the stock numbers are lower than the USDA reports. Will the USDA adjust in the June report is a major question? Bean meal and oil have also rallied in the past couple weeks aiding to soybeans rise. The fundamental news around the market was less in focus this week with the May contract expiration causing for most of the volatility.

Via Barchart

Dow Jones

The Dow was up slightly on the week as more news about reopenings continue to roll in and President Biden gave his first speech to Congress. Vaccination rates continue to be strong in many cities and New York City announced this week they will lift all restrictions for reopening July 1^st.

Lumber

Check out our recent post about the lumber market and what all has been going on.

Podcast

Check out or recent podcasts with guests Elaine Kub and Kyle Little. Elaine and Jeff discuss grain markets and trading grains while Kyle helps give insight into the Lumber markets and what has been going on.

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

Other News

On Monday, daily trading limits will expand for our major markets with corn increased from 25 cents to 40 cents, beans from 70 to $1.00 and wheat from 40 to 45. The CBOT is not tipping their hand that they expect volatility this summer, the daily limit increases are largely due to the high prices to keep daily ranges in line with historic percentages of price.

US Drought Monitor

The map below shows what areas are currently experiencing drought conditions across the US. Not much changed from last week. The rains in Texas will help alleviate some dryness in the area but will not solve their moisture issues. Some dryness has crept into Illinois and Indiana but nothing to worry about right now.

Weekly prices

Via Barchart.com

23 Apr 2021

Agriculture, Corn, Cotton, Dow Jones, Grain, Lumber, Market Commentary, Market Updates, Research, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

Ag Markets Update: April 17 – 23

Off to the races? Corn was limit up Thursday as prices for May corn topped $6.50 for the first time since 2013 continuing its impressive weekly run. The May option expiration occurring Friday has traders scrambling to cover short call option positions by buying futures and positioning themselves for next week’s first notice day. As we have been seeing in the cash market for a while with improving basis, it seems the futures market is catching up and realizing the market needs corn and it needs it now. Any farmers with old crop remaining has the cards in their hands looking to get prices high enough for them to make any sales. The cold weather/snow across much of the country this week is not expected to cause many issues except delaying planting a little longer in some areas as we wait for soil temperatures to get back up. Brazil’s dry outlook has not changed and will continue to put stress on a crop that does not need anymore problems. Continue to monitor the dryness in South America as problems there will transition to gains in our new crop markets as the world will need the US to produce a large crop.

Via Barchart

Soybeans gained on the week as they followed corn for similar reasons. The South American weather issues will not effect the soybean market like corn but as we have seen good news for one has been good news for the other. The may option expiration came into play as beans saw a strong rise on Thursday even though they were not limit up. Exports this week were nothing to write home about but still within expectations and well ahead of the pace needed to meet USDA estimates. With world demand high, the US needs to have a great crop to meet it and not cause issues in the world pipeline. As volume begins to pick up in the November contract it will be important to have a plan for marketing your crop this year as volatility is always around.

Via Barchart

Cotton did not enjoy the rally the grains had this week as they continue to trail the other markets in price competitiveness. Weekly exports are expected to decline going forward, not from a lack of demand, but from a lack of supply left in the US, which should be seen as bullish despite lower export numbers appearing bearish. The big head scratcher is why cotton prices are lagging the grain market so much when prices need to be competitive just to get all the acres in the ground. With corn and soybeans taking their next leg up this week, December cotton equivalent price should be about $1.11 vs. the current $.84. What is needed to get to this level? We could see what is currently playing out in the grain markets on option expiration causing a big boost when the next one comes up, but cotton needs a boost to get it all in the ground.

Via Barchart

Dow Jones

The Dow had been trading fairly evenly on the week with some down and up days until Thursday’s losses following the Biden administration stating their plans to increase the capital gains tax to over 40% for high earners. A number that high will face headwinds from the house and senate and is unlikely to come to fruition but the Biden administration did campaign on raising those and a raise should be expected.

Lumber

Check out our recent post about the lumber market and what all has been going on.

US Drought Monitor

The map below shows what areas are currently experiencing drought conditions across the US. Not much changed from last week.

Weekly Prices

Via Barchart.com

19 Apr 2021

Agriculture, Corn, Cotton, Dow Jones, Grain, Market Commentary, Market Updates, Soybeans, Weather, Weekly Prices rcmagserv 0 comment

Ag Markets Updates: April 10-16

Corn had a good week as we reach new contract highs in May for old crop. As you can see in the 1 year chart below after trading in the $5.30-$5.60 range for a couple months corn has seen a strong response since the Projected Plantings report came out. The export numbers this week were not great, yet corn was still able to post a positive day following the report as the number was still 10 million bushels above the weekly total needed to meet USDA estimates. Analysts are expecting Brazil’s safrinha crop to potentially lose 5 million metric tonnes due to the late planting and stress from the drought conditions that have been present for a while. Ethanol stocks are the lowest mid-April they have been since 2014 showing that demand has ramped back up as re-openings continue. Some corn planting has started in areas across the country but this week’s cold weather will bring it to a stop as many areas will have to wait for it to warm back up to continue planting.

Via Barchart

Soybeans saw small gains on the week, but for the most part it was a quiet week for beans after a slight dip then gains. The news in the market around soybeans has been limited which is why the corn and bean chart are starting to look different. The cold weather that will delay/pause planting in some areas will not have much, if any, effect on soybean planting as they usually begin later anyway. Beans are now well off their contract highs for old crop and until we get back to those levels do not expect any strengthening look from the charts. Soybean’s will continue to move with exports and if anything crazy happens in South America but will probably slowly follow corn just how corn followed soybeans until now for the short term.

Via Barchart

Cotton continues its rebound from the recent lows as world demand continues to increase and consumer spending rebounds. The dollar has also weakened recently supporting commodities as well. Retail sales for the month of March were reported this week climbing 9.8% as stimulus checks were spent and consumers get back out in the market. With cotton prices where they are compared to other crops many farmers are stuck with a difficult decision on which to plant. In some cases, farmers in areas such as west Texas, currently suffering from bad drought conditions, may elect to plant sorghum (milo) as a cheaper to produce alternative that has a much wider planting window. The drought conditions are a problem (see map below) in many areas, but when 40% of the cotton crop is expected to be planted in Texas the supply and demand story come the fall comes into play.

Via Barchart

Dow Jones

The Dow gained on the week despite the news that the Johnson & Johnson vaccine distribution will be put on hold after 6 cases of a rare blood clot after giving out over 7 million doses. The reopening strength has still been playing in the markets as many consumers are out and about again after receiving stimulus checks.

Lumber

In case you have not been paying attention to it, lumber prices have been high for a while now but continue to climb. In the cash market any wood that is for sale is bought immediately and this is also being reflected in the futures market with it now trading over $1,200. This plays out in the cost to build houses in a real estate market that has been hot the last year in the US despite the pandemic.

US Drought Monitor

The map below shows what areas of the US are currently suffering from drought conditions and as you can see it is widespread. As planting begins in many areas some areas will be delayed as they wait for a good rain to help them get in the field. The drought in Texas will have the biggest effect on Cotton as over 40% of the US cotton crop is expected to be planted there.

Weekly Prices

09 Apr 2021

Agriculture, Cash Basis, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATES: APRIL 3 – 9

The grains have started to separate themselves from each other as they begin to have their own trades tied to the US growing season coming into view. After last week’s plantings intention report, corn had a couple down days but has climbed back to the post report level heading into Friday’s USDA April report. Corn’s exports this week were better than expected along with news that China may buy up to 80 million bushels into late summer (bullish news for old crop corn). Basis is showing us that supplies are tightening despite the lagging data from the USDA stocks report. Even if Friday’s report does not show this expected change, will the market believe the USDA or the cash market? Brazil’s safrinha crop is under stress as it continues to be dry with no immediate relief which is expected to cause even more damage to a crop that has had its issues coming down the home stretch. Brazil’s corn production according to this week’s CONAB report is still expected to be a record 4.29 billion bushels despite the stress. The US forecast is dry in many areas as early planting looks to be available across multiple regions.

Via Barchart

Soybeans had a tough week following last week’s rally post acreage announcement. World vegetable oil prices have been falling and have pulled beans down with it. The markets are trying to figure out how to price beans. ASF in China is still a problem while world demand continues to rise outside of hog feed. US consumer demand coming out of Covid-19 lockdowns has been supportive to bean prices, despite the reopening issues in other parts of the world. Looking at new crop beans, they continue the slow climb higher, as the US crop is expected to play a major role in meeting the post lockdown demand towards the end of 2021. The USDA report on Friday will show the updated stocks and, like corn, soybean demand should be higher than the last report based off continued exports since the last report.

Via Barchart

Dow Jones
The Dow gained on the week as interest rate anxiety is calming down and funds reposition themselves away from tech and into more cyclical sectors following tech’s run to end 2020. The Biden administration announced their plan for a $2+ trillion-dollar infrastructure plan this week that covers many different areas. Investors will keep their eye on the implementation of the plan and what sectors will be the best benefactors.

Basis
Cash basis levels in many areas continue to move higher even on days when futures prices rally. The cash market is reminding us that demand is still strong and many farmers have sold most of their old crop, so finding corn and beans is not as easy since farmers have sold with the rally of the last several months.

Weekly Prices

Via Barchart.com

04 Dec 2020

Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, U.S. Dollar rcmagserv 0 comment

AG MARKETS UPDATE: NOVEMBER 21 – DECEMBER 4

Corn was unchanged over the last 2 weeks as it has been range bound between $4.20 and $4.40 as you can see in the chart below. This is the first stretch like this since corn began its climb up, as there hasn’t been any new news to really propel it. China continues to be the main buyer as we have come to expect, but with no surprise sales or weeks above expectations that hasn’t been enough to break through. The break followed by a bounce is good to see as markets remain bullish, but needed a correction along with the end of the December contracts in the last couple of weeks. Chinese demand of corn will continue to be the bullish news as we look for that to continue.

Via Barchart.com

As you can see from the chart below beans have had a couple decent size swings in the last two weeks despite only being down 10 cents over that time. In that span we have seen January soybeans touch $12.00 and dip to $11.43 before the recent bounce back. The good news is it appears that Chinese buying should help keep some support under soybeans as they will look to be aggressive buyers when price falls (like the recent 50 cent dip then bounce back). South America will get some rain across Brazil this week, but the La Nina pattern looks to bring hot and dry weather in the coming months during an important stretch. After the fall at the start of the week it is nice to see a bounce back to current levels showing there is still bullish support. With funds continuing to be near record long, when they decide to take profit we may see dips similar to this week. We continue to hold the same strategy of not storing beans into the new year and take advantage of strong prices while if you believe markets are going higher to look at ownership on the board.

Via Barchart.com

Dow Jones
The Dow has traded over 30,000 several times over the last 2 weeks, but has failed to hold onto that number for a longer run up. Positive vaccine news and the possibility of vaccinations starting this month were the main driver to get it to this point. Stimulus talks have resumed as well, with some sectors getting boosts from investors expecting targeted stimulus to certain sectors (airlines as an example).

US Dollar
The USD has continued its fall over the last couple of weeks. The 3-year chart below shows where the USD is relative to the past few years and shows that we are at levels not seen since early 2018. A weaker USD helps US commodities and makes them more competitive on the world market.

Via Barchart.com

Phase 1 Trade Deal
Just a quick note: Joe Biden said he will not immediately cancel the Phase 1 trade deal with China or take steps to remove tariffs currently in place.

Via Barchart.com

19 Nov 2020

Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: November 14 – 20

This week’s gains follow on the news from the USDA report from last week, as well as continued export sales. As we have seen from the last two pullbacks in the chart below, corn has bounced back and reached new contract highs this week. US corn is still cheap on the world stage so we should not struggle to find countries wanting to buy from us. Exports have slowed but are still consistent and strong, putting us in a much better position this year than we were this time last year. There was some pullback from the highs as there was profit taking from the funds even though they still are very long. Corn and beans have been moving very similarly as you can see from the two charts, and we expect this to continue as the underlying fundamentals moving the markets are the same with exports and South America weather.

Via Barchart

Soybeans saw another positive week as they move for similar reasons as corn. Beans traded up over $11.85 but have fallen back from those levels the past couple of days. Central Brazil’s weather remains good as planting was 67% complete and making progress. Southern Brazil and Argentina still have a dry outlook, despite getting more rain than expected this week. Looking forward to next week, we’re expecting some more strong rain, but the promise is still slightly too far out to be confident in. Exports continue their strong run as we expect them to into the new year. World bean, bean oil and other oils (palm oil, etc) all have very strong prices. With such a broad demand strength this is supportive for beans as well. The bulls have all the factors on their side from fundamental to technical which is why we have seen some crazy intraday ranges.

Via Barchart

Dow Jones
The Dow flirted with 30,000 this week but did not get over the hump and has since drawn. More positive Covid-19 vaccine news came out this week with another potentially 90% effective vaccine being announced for roll out. As Joe Biden begins filling seats in his cabinet-to-be, along with the senate race in Georgia, those will be the political market movers for the time being.

Via Barchart.com

02 Oct 2020

Agriculture, Corn, Dow Jones, Market Commentary, Market Updates, Soybeans, Weather rcmagserv 0 comment

AG MARKET UPDATE: SEPTEMBER 26 – OCTOBER 2

Corn saw a big boost as a result of the surprises in the USDA stocks report this week. Corn came in 255 million bushels below estimates at 1.995 MBU, which comes back to what everyone thought that the USDA overestimated the 2019 crop. This adjustment lowers the 2019 yield by about 3 BPA, which sounds much more accurate from what we heard from talking to farmers. Ultimately, this means world stocks are tightening as Chinese demand of US grains has picked up with Phase 1 trucking on. Post-report funds continued to get long, which helped the drive up as well. Exports continue at a great pace as harvest begins in many parts of the US. Continue to keep an eye on exports and weather as any major delays to harvest/crop moisture could prevent problems although the forecast is favorable into mid-October. The chart below shows the sharp bounce back up after a couple weeks of slow losses.

Via Barchart

Soybeans had the biggest surprise of the report as ending stocks were down 42% from the September 2019 report. Beans came in at 523 million bushels, over 50 million below the average estimates. This low number on top of continued large buying from China saw a 25-cent rally after the report. Like corn, funds continued to get long post-report and are now long 1.07 billion bushels. As export numbers continue to be large and the USDA updated the stocks down, both were very bullish. Brazil’s growing season has gotten off to a good start as some areas are starting to look for rain. A good rain in Brazil would put a damper on the bulls, but with funds so long they will look to exports and harvest.

Via Barchart

Dow Jones

The Dow bounced back this week despite a Presidential debate that left more questions than answers. Tech continued its bounce back after it took a tumble a few weeks ago as airlines and travel industry saw a boost as more potential aid could be heading there way along with a second stimulus package is in discussion. The unemployment report on Friday will be the main market mover. But with President Trump testing positive for Covid-19 more uncertainty and volatility will be added to the markets. Any updates on his condition with it will be watched closely as we will not see any campaigning from him over the next couple of weeks.

World Weather
Brazil and Argentina are off to a pretty normal start as planting went well. Central Brazil will see higher than normal temperatures accompanied by average to below average precipitation. Dry and warm outlook for central Brazil to start October and Argentina has a slightly dry outlook with normal temperatures.

Tag: DOW

AG MARKET UPDATE: MAY 1-7

AG Market Update: April 24-30

Ag Markets Update: April 17 – 23

Ag Markets Updates: April 10-16

AG MARKET UPDATES: APRIL 3 – 9

AG MARKETS UPDATE: NOVEMBER 21 – DECEMBER 4

Ag Markets Update: November 14 – 20

AG MARKET UPDATE: SEPTEMBER 26 – OCTOBER 2

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