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18 Sep 2020

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

Ag Market Update: September 12 – 18

Corn gained on the week following soybeans lead. Corn exports, like soybeans, have been strong with China being a large buyer recently. As some analysts have pointed out, this pace of Chinese purchases may be a signal that their supplies are much lower than they have reported. As most numbers that come out of China, one should be skeptical, so this may be showing us where they actually stand. With weather looking good heading into harvest, the next few weeks should allow for steady progress. As you can see from the chart below, prices are at the highest they have been since March heading into harvest following the upward trend in beans; you may want to begin looking at putting a floor in. If corn exports continue (136% ahead of where they were this time last year), we may still see an upward trend, but keep an eye on demand as harvest begins.

Soybeans saw huge gains this week to get and stay over $10.00 for the first time in the last 2 years. The continued buying from China, 6+ MBU seemingly every day, has led this charge up as we continue to see large export numbers. Funds have also been buyers along the run and are nearing 1 BBU in net long positions, the largest long position since 2012 when we had a devastating drought. If China keeps up with the purchases it is definitely supportive for prices. Soybean exports are 189% ahead of where they were this time last year. If soybean sales keep up this pace there does not seem much to get in the way of prices as South America is running low on last year’s crop as they begin planting for this year. The chart below shows the recent surge reaching contract highs as we head into harvest.

Dow Jones
The Dow gained on the week after several up and down trading days as tech stocks continue to struggle after the large selloff last week. It seems to have weathered the storm and may continue its slow recovery as many major areas of the US stay in some form of lockdown.

World Weather
Dry and warm weather remains heading forward as harvest beings in the US. South America is unusually dry as planting season starts and Russian wheat areas need rain. A large spread soaking rain in SA may dip prices a bit, but if SA drought continues after planting that would be bullish for beans.

11 Sep 2020

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

Ag Market Update: September 5 – 11

Corn gains on the week have been driven from continued strong export numbers as well as trade expectations of a 178 yield estimate heading into the USDA report on Friday. The report came out with a 178.5 bu/acre estimate which is pretty in line with what the trade was expecting. The drop from the 181.8 bu/acre yield estimate from the previous USDA report comes from a combination of the storm damage in Iowa as well as the extended stretch of dryness across many states to end last month. This impressive run up by corn from the lows seen in early August has been welcome heading into harvest. With a 2.5 billion bushel carryover still estimated we may see a tightening of prices as corn leaves the fields and we get a better idea on final yield as well as demand. The bump up in expected corn exports is good to see as the USDA expects countries (China) to continue their buying. Below you can see the Supply and Demand chart for corn from the report.

Via USDA

Soybeans have seen strong gains like corn in the last month. The report came through with numbers close to expectations with little surprises. Exports continue at a good pace and China announced that they intend to rebuild government stocks. A month ago $10 soybeans did not seem to be in play but now it is within a few cents. As we get closer to harvest the weather’s effect on the crop will be diminished outside of an early freeze that could cause damage. Keep an eye on exports to keep their pace and any bullish weather news as that magic $10 number looks to be met. See the Soybean Supply and Demand chart from Friday’s report below.

Via USDA

Dow Jones
The Dow has continued to bounce up and down finishing down on the week as tech continues its loses. As the pandemic drags on and business come back or close for good the attention will begin to shift towards the election.

Korea Bans German Pork Imports
South Korea banned German pork imports this week after an African swine Fever case was confirmed in Germany. This move falls in line with guidelines for animal food and safety and is an expected move as South Korea themselves have had trouble with ASF in parts of the country and has been banned from exporting its pork products. Look for some of South Korea’s demand to come to the US market.

USDA: The USDA released their World Agricultural Supply and Demand Estimates today, read the entire report here.

04 Sep 2020

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

AG Market Update: August 29 – September 4

Corn saw slight loses on the week after trading in the low $3.60s despite strong export numbers and falling crop conditions. The crop conditions at this point usually fall as corn starts to get ready for harvest and lose its color as ratings come from looking at the fields rather than any testing. As China has continued to be a large buyer it looks like the market has factored in their purchases and will expect similar levels or purchases moving forward. The forecasts have some rain in much needed areas as we get closer to harvest to help hold on to what many expected to be a great crop a month ago but has seen stress as of late. Rain over the weekend is expected for much of the corn belt especially in areas of the WCB that have been the driest. Although the rain may be late to help out corn much it should give the beans in those areas help. Look for the trade to hold its breath and trade in the $3.50-$3.60 range as everyone holds their breath in anticipation of the USDA Report next Friday.

Soybeans continue its climb higher as exports continue to be huge. Despite a bearish change in the weather with widespread rain coming this weekend the demand continues to pull beans higher. The rain could be coming at just the right time in certain areas as yields can still be effected. One private yield estimate from StoneX pegged the US bean yield at 52.9 bushels. This would be a larger trend line yield but with the increased demand from China it would not crush prices moving forward. Keep an eye on other private estimates as we head into the USDA Report next Friday to hopefully get an idea what the USDA might come out with. Look for exports to continue their strong run as any pullback would hurt prices that have been drawing their strength from recently.

DOW Jones

After trading over 29,000 the Dow saw large losses on Thursday after a week of gains. After the large run-up the last few months the losses could be from profit taking or the start of a market correction but there is no way to tell after one day.

Vaccine News

The US Center for Disease Control announced that states should prepare for a potential vaccine on November 1^st. This would be great news heading into the end of 2020 and also right before the election.

10 Aug 2020

Agriculture, Corn, Cotton, Lumber, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: August 1 – 7

Corn took it on the chin this week, again, as crop conditions and weather forecasts continue to point toward the potential of a record yield. With strong conditions and weather moving forward, most of the corn belt, with the exception of parts of Iowa suffering from severe drought, are running out of time for many weather factors to effect the crop. Keeping an eye on forecasts for Ohio and Michigan will be important to farmers as they could use some rain in those areas but are not desperate, yet. If the forecast continues to look promising there is not much bullish news out there to help find support with a 180 bpa crop still in play. Keep an eye on exports as we continue to see strong export numbers but little positive price reaction as a product of it. Yield estimates range from 178-183 bpa from what we have seen from across the spectrum, showing that many top experts believe a record yield could be seen this year.

Soybeans had a tough week like corn because high yields are still very much in play on top of already strong stocks. Without China ramping up their purchases to try and at least act like they are trying to reach the Phase 1 Trade Agreement; beans are running into a demand problem. Bean yields are looking to potentially be 52+ bpa with a 73% G/E rating this week saw prices take a hit. Beans and corn have been moving lower over the last few weeks as few weather issues and no large surprises in demand have come to fruition. Any problem that China has with the Three Gorges Dam area could lead to more purchases but a total failure of the dam would be a disaster as it could cause a massive loss of life along with flooding of large areas of farmland.

Cotton has seen a boost this week as it, like other raw materials have seen a boost as demand around the world starts to come back. Another supportive factor for cotton has been the continued decline in the value of the US Dollar. The threat of Hurricane Isaias effecting the crop in the SE helped give a boost early in the week but how much damage it actually did to the crop remains to be seen. If prices can breach and stay above 65 cents that would be a good level of support.

Phase 1 Trade Agreement Meeting
The US and China are set to have their first check-in meeting to assess how Phase 1 is going (spoiler alert: not great). This is on top of recent tensions over the closing of embassies and spying allegations. Not sure that anything good can actually come out of these talks but they will be worth keeping an eye on August 15^th. Hopefully we see a commitment to ramp up and get a boost to start that week following.

Lumber
Lumber continues its upward trend to price levels we have not seen since 2018. Lumber is a commodity the is easily produced because of the sheer quantity of it available supply is not an issue to slow down consumption. As many purchases and contracts are done well in advance the demand has not wavered as much as the pipeline of getting it from A-Z has. In a volatile market like this, especially during this kind of positive run for price, nobody ever wants to call the top so looks like everyone may want to ride it out and see what happens.

31 Jul 2020

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

Ag Markets Update: July 25 – 31

As weather across the country continues to be supportive for the crops corn prices have dropped. The past few weeks of timely rain and cooler temperatures has put a trend line or record national yield very much in view. From talking to farmers across the country many think this has potential to be one of their best crops and as great as that is everyone knows the larger the yields the lower the prices tend to be. With China well behind on their phase 1 trade agreement purchases, corn will need to get support elsewhere unless China decides to ramp up their purchases in the second half of 2020. Keep an eye on the flooding in China as they have lost over a million acres of farmland and will tighten their supplies. The higher crop conditions this week did not help prices either as they came as a surprise.

Soybeans and corn are in a similar situation where large yields are very much in play due to the weather of the past month and what looks to be coming. Soybean exports continue along at a good pace but nowhere near the Phase 1 agreement numbers that were expected. If China can ramp up their purchases in the coming months beans can get a boost that is unlikely to come without a weather problem. The good export news of late has been offset by good weather and higher expected yields which is frustrating seeing bullish news be uneventful for prices.

After a short term pull back from the near term highs markets bounced off a technical low and appear poised to give the highs another run. Weather watchers will be tracking hurricane Isaias and it’s potential impact to the delta over the weekend. In many cases the fear of hurricanes has been bigger than the actual punch. In reality, following the storm days in advance does little good and is often a story of buy the rumor and sell the fact. Look for prices to test the 65 cent level and be prepared to increase hedge protection above 63.50.

DOW Jones

The Dow continues its slight downtrend this week as Covid-19 cases remain high in many parts of the country. Despite good vaccine news coming out this week as several promising candidates move onto the next phase of trials, the Dow fell again. All eyes were on Capital Hill this week as Google, Facebook, Amazon and Apple’s CEOs were questioned by politicians looking at anti-trust issues. These were not huge market movers but something to keep an eye on as these companies have helped lead the charge up from the lows back in March along with other big tech companies.

Via Barchart.com

10 Jul 2020

Agriculture, Corn, Dow Jones, Lumber, Market Updates, Soybeans, Wheat rcmagserv 0 comment

Ag Markets Update: July 4 – 10

Corn had a choppy week only to end $0.09 lower after last week’s shockingly bullish USDA report. The main price mover this week was the uncertainty in the weather outlook. The weather post July 15^th has been in limbo of hot and dry or cooler with some rain. Hot and dry would hurt the crop for the long run lowering yield, which is when we saw the prices rise on certain days. The post July 15^th to August 1^st period is very important to keep an eye on moving forward as the weather will be the key mover and the August 10^th USDA report is worth keeping an eye on. The eastern corn belt looks to have extreme heat and dryness over the next week after a round of rain earlier this week…but let’s be honest, the weather man is only right 10% of the time = changes to the forecast are expected and prices will react.

“Supply side for corn ad beans adjusted due to the changes in planted area, so nothing too exciting there. But corn demand got cut quite a bit. Even so, the ending stocks are below trade expectations,” Scoville says (agriculture.com)

Soybeans had a similar week to corn with some up and down price movement after the rally last week. The hotter and drier outlook in parts of the Midwest will have an adverse effect on the crop like it will for corn. The lack of sales to China is are still holding back the market as Phase 1 continues to trail behind trade goals. Like corn, keep an eye on weather moving forward but as mentioned before. And big purchases from China would be a promising sign, but it doesn’t seem like that’s bound to happen any time soon:

Meanwhile, trade relations between the U.S. and China remain relatively frosty. President Donald Trump noted earlier today that relations are “severely damaged” after each has accused the other of mishandling the coronavirus pandemic. Trump indicated a planned phase-two trade agreement is still on the table but is not a priority right now. (farmprogress.com)

Wheat got a boost this week (+$0.42) as Russia and Europe’s wheat crops look to come in well below pre-harvest estimates. Low harvest numbers from the rest of the world is bullish for U.S. wheat prices as our growing season continues. This boost is very welcome following the last few months of declining prices. The markets will keep an eye on Russia and Europe as they progress through harvest.

Via Barchart

Dow Jones
The Dow continues to move on any news related to COVID-19. A lot of uncertainty hangs over the U.S. and the markets as spikes in cases continues around the country. An important thing to keep an eye on for the markets will be what schools decide to do in the fall, as going back to school is being used as a tool to also try and continue to reopen the economy.

Lumber
September lumber futures reached a multi-year high this week and are now up +82% from their April multi-year low. The best way to sum up the market place is by watching it print. It was up $48 – $498 since Wednesday. There isn’t enough wood to supply the needs, and mills are raising prices at will. It is a market squeeze that only ends once the pipeline is filling or prices shut down purchase order books.

26 Jun 2020

Agriculture, Corn, Market Commentary, Market Updates, Other News, Soybeans rcmagserv 0 comment

AG Markets Update: June 22-26

Corn prices have taken a hit this week with Dec ’20 futures dipping below $3.30. Rains over the past week in the corn belt and warm temperatures will help support the crop along with rains and warm temps heading into the 4^th of July. Exports continued their lackluster pace with no big sales to provide any supportive news. Tuesdays Stocks and Acreage report is the only place to look if you are looking for bullish news, but do not get your hopes up for a positive surprise from the USDA. The average trade estimate for US corn planted acres is sitting about 95 million acres which would be down from the March report of 96.99 million. With good weather forecast for pollination time keep an eye on if that changes as that would be a little supportive.

Via Barchart

Soybean prices took a hit this weak as no big sales were announced and growing tensions between the US and China. The administrations friction with China continues to escalate as Sec of State Pompeo is going on a full offensive to gather European support for more scrutiny of Chinese policies. The Soybean crop, like the corn, benefited from rains over the last week and will benefit from the forecast upcoming rains as well. Soybeans need the purchases from China to continue, if not accelerate, to have some bullish news. A mix of growing tensions with China and good US weather will continue to weigh on the market and should be the main things to keep an eye on going forward barring any surprises from the USDA report on Tuesday.

Via Barchart

DOW Jones

The Dow Jones took a big hit at the start of the week as cases begin to increase across the country in many states. As concerns of a larger “second wave” loom, markets may trade in this range until it seems we are out of the woods. The market will move on any vaccine news, news about US and China relations/trade war, and COVID-19 case numbers moving forward it seems unless the Fed comes out and does something.

Misc

As you can see from the prices below, aside from Corn, it was a relatively flat week for most other areas so the post is a little shorter this week. I wish there was more positive news out there about the markets but with everything that has happened this year and good weather there just isn’t much. It will be important to keep an eye on Sec Pompeo’s meetings with members of the EU as the week goes on.

Via Barchart

19 Jun 2020

Agriculture, Corn, Lumber, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

AG MARKETS UPDATE: JUNE 13 – 19

The July corn price has slowly climbed up since the start of May, more of a crawl than a climb, but front month prices have moved up. The next month of weather will be really important for this years corn crop and decide what level of potential yields we could see. The next week looks to dump a lot of rain in the western corn belt which has had some really dry areas, and moderate amounts of rain in Illinois over to Ohio and throughout the SE. The combination of good weather and a lack of any serious exports does not bode well for corn prices. Farmdocdaily has projected future corn prices which we see as a very real possibility. A trend line yield is not good for prices at harvest time. This would be a great time to look at doing some HTAs with your elevator or hedging in your brokerage account because a >170 yield come harvest will lead to poor prices on top of poor basis in some areas (trading futures and options on futures are not suitable for all investors). It is important to also consider what government payments you have received and see how they will effect your ultimate price.

(Farmdocdaily)

Soybean prices gained a little bit this week but nothing too exciting. With another week of poor export sales, beans have been up on the week on rumors of Chinese buying despite no official confirmation from the USDA. Beans will move a little more independently as they will heavily rely on Chinese buying. The rumors of buying has gotten prices to this level, but big purchases and an effort to meet the Phase 1 trade deal would be very supportive for beans, even if the expected yield continues to be good. The June 30^th Stocks and Acreage report will be very important to keep an eye on as well in the coming weeks to get a better idea of how big the corn and bean crops can actually be.

DOW Jones
The Dow Jones continues to try and erase the loss from last weeks major selloff. Continued new unemployment numbers came in Thursday with 1.5 million new unemployment claims. The economy is opening back up, but unemployment remains high as we continue to see the fallout of COVID-19 reach into the summer. Leveling positive rates and hospitalizations have many people wanting to move further on in their cities reopening plans but officials continue to warn about the possible second wave causing businesses to partially reopen (partial reopen=not as many jobs). Until there is a vaccine this will continue to be the major mover of the markets.

Lumber
Lumber has had a solid week in gains for the prices as a few factors hit the market. The cash market has picked up in the last week and mills have ramped up their production again. The market closed over the 100 DMA earlier this week breaking that technical resistance. Housing has begun to recover and a continued recovery would be welcome for demand.

12 Jun 2020

Agriculture, Corn, Market Commentary, Market Updates, Soybeans, Wheat rcmagserv 0 comment

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

Agriculture, Corn, Cotton, Market Commentary, Market Updates, Other News, Soybeans rcmagserv 0 comment

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.

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Tag: DOW Jones

Ag Market Update: September 12 – 18

Ag Market Update: September 5 – 11

AG Market Update: August 29 – September 4

Ag Markets Update: August 1 – 7

Ag Markets Update: July 25 – 31

Ag Markets Update: July 4 – 10

AG Markets Update: June 22-26

AG MARKETS UPDATE: JUNE 13 – 19

Ag Markets Update: June 6 – 12

Ag Markets Update: May 30- June 5

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