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14 Apr 2025
Agriculture, CME, Corn, Education, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weather, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: MARCH 31 – APRIL 14

Old crop corn has had a strong rally over the last 2 weeks, having a 40 cent rally after trading relatively flat since its 80 cent pullback in February. While markets were rallying before President Trump’s announcement of a 90 day pause on tariffs, they liked that news to push higher. Any positive news about negotiations with Mexico would be great for corn. The April 10th crop report cut old crop stocks more than expected on increased exports by 100 million bushels, but a modest 25-million-bushel demand cut to US feed demand. US planting should accelerate this week as weather is favorable and where planting hasn’t started allow for field work to get done. Weather during planting will be the main factor if we end up having 95-96 million acres of corn planted.

Via Barchart

Soybeans have also benefited from the recent rally corn has. While the rally may be losing steam until we have a better idea on how many acres will actually be planted in the US, new crop’s rally above the 20, 50 and 100 day moving averages provides some support under a volatile market. China continuing buying beans will be important as any mass cancelations will signal trade issues in Washington. As trade negotiations continue it will be important for small wins for the ag sector in all of them who are currently buyers.

Via Barchart

Equity Markets

“Liberation Day” created sharp market selloff with the White House announcing a delay to the tariffs a week later as countries came forward wanting to negotiate. The markets are well off their highs from February as well off their lows from the post tariff announcement. As the market is in flux as they try to get a feel for what could come next for the economy (recession?) or what comes with these negotiations and China, volatility will likely remain on any headline news.

Via Barchart

Other News

  • Any progress in trade agreements with Mexico could be good for corn prices as they are our largest buyer. China needs to continue buying beans and any trade progress with them would help beans.

 

Drought Monitor

As planting approaches here is the most recent drought monitor.

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

14 Apr 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: Futures ran up about 33% after the election. It has given back almost 25% of it since the tariff announcement

The Lumber Market:

Futures ran up about 33% after the election. It has given back almost 25% of it since the tariff announcement. The futures market is staying within the parameters of the news. We would like the inclines and declines to be more subdued, but everything we hear is vague. That has the trade pushing buttons left and right. What’s interesting is the commitment of trader’s report that is compiled Tuesday to Tuesday. As of Tuesday, Wednesday was the crazy up day, the industry added 784 longs and liquidated a whopping 1684 shorts. The funds exited 1323 longs and added 390 shorts. That is a lot of movement for a week in this contract. A couple of takeaways:

  1. Futures made a lower low after the massive, short covering by the industry.

  2. The funds started adding long in the hole last time down.

  3. The industry is seeing better activity, but the mills have wood.

  4. The elephant in the room is again a 25% tariff hanging over the market and a rise in the duty coming.

  5. The elephant is more a possibility while the real time fact is an oversupplied environment.

  6. Technically we broke the channel down. It could return to the start of 527.50. That is unlikely if you add in number 4 above to the equation.

The futures market is a trading textbook. The industry is in sync and the funds are not. Under these circumstances, look for this oversupplied market to find some footing. There could be a seasonal switch flipping on this one. The spreads are getting out of line in cash. OSB?? 2×4 9ft. eastern?? There will be opportunities as prices fall in cash. If futures stabilizes the basis will pop up again. Looks like we are back to working for a living.

 

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

[email protected]

312-761-2636

08 Apr 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: It’s hard to believe that we could start to discuss a housing problem in the near future

The Lumber Market:

It’s hard to believe that we could start to discuss a housing problem in the near future. A week ago, there wasn’t an economic reason to talk about a recession. Today it is real. The key is the stock market. No one disagrees that a sell-off was needed. The mag 7, especially Nvidia, ran the market up. Today the market is taking the froth back. What we see in equities in these situations is a massive increase in sellers. You first have to stop the selling and then build confidence back. In 2009 and 2021 the government wrote checks to get it back. That’s not going to happen this time making the confidence factor murkier. For housing it is not as simple as finding help from an equities rally. The genie is out of the bottle. Any help from the demand side has been pushed out. It’s time to sharpen the pencils again. We came into the year looking for a supply issue to help prices not demand. That still lingers…. as does the tariff. As I am writing this the Spoo’s are down 220. Stop the equities meltdown and the lumber futures will correct. The algo selling lumber futures is feeding off of the equities.

The chart below shows a channel pattern that started from the bottom of the move back in July 24. Breakeven was going to come into play eventually. Last July showed the market could not survive at such a low price. Last week’s $91 break indicates the futures market was up on froth. A close under 569.58 indicates the futures market doesn’t care about breakeven.

Lumber futures corrected the tariff rally. This week needs to see overall calm, or we could be in trouble.

*As of Tuesday, there were 5000 industry shorts that are now up $91. Good risk management!

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

[email protected]

312-761-2636

31 Mar 2025
Agriculture, CME, Corn, Cotton, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, USDA Report, Weather, Weekly Prices, Wheat rcmagserv 0 comment

Ag Market Update: March 12 – March 31

The March 31 Stocks and Acreage Report did not provide any fireworks as there were no major surprises in the report with the USDA saying there will be 95.326 million acres planted. While this is a large acreage number the trade and talk the last couple weeks was about the likelihood of the USDA coming out with a 95 number. While the report could have been worse, stocks coming in exactly in line with the estimate did not pile on with bad news. As we head toward planting, weather, South America and tariff wars will be the main movers now.

Via Barchart

Soybeans came in at 83.495 million acres as their lack of profitability at current prices is making farmers switch some acres to corn. As you can see from the chart below there have not been much help for beans but if this acreage number is close to what we see, it is hard to think they would dip much below $10. The post report action was disappointing as beans continued lower.

Via Barchart

Wheat had bullish news from the report as acreage came in 1.125 million below estimates. Wheat has some bullish world news for price with emergence concerns in the Black Sea and US Plains, despite recent price action. News out of the Black Sea and any issues with the US crop will be market movers for now.

Via Barchart

Equity Markets

The equity markets continue their volatile swings while President Trump’s “day of liberation” approaches on April 2 when tariffs are supposed to be going in place. Volatility will be the name of the game as many unknowns remain in the trade wars.

Via Barchart

Other News

  • Cotton acres came in at 9.867 million. This is 1.315 million acres less than last year. Cotton needs to see demand pick up to get back and stay over 70 cents/lb.

Drought Monitor

As planting approaches the drought monitor begins to become important again as subsoil moisture always seems to be a problem somewhere.

PRICES

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

 

24 Mar 2025
Agriculture, CME, Futures, Hedging, Housing, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: It was a tough week for the cash market

The Lumber Market:

It was a tough week for the cash market as mills were forced to lower prices to get rid of excesses. Futures on the other hand, held value. It was a very slow volume week as the trade stayed on the sidelines. While this is normally a hard time to read the market, it is obviously much harder this year. A few keys to be watching:

  • I have been preaching about the high amount of inventory out in the field. Every week that number is reduced. A couple day run in cash could even things up and force the buyers back in. That remains to be seen, but there will be an uptick in usage.

  • I’m not a fan of the “underbuilt” hypothesis. There are too many dynamics that have to come into play to make it a factor. We saw them come into play during covid. When momentum to move increases we are far short of homes. What we have today is a two-pronged move being created. The first is once rates drop there will bring a ton of existing home inventory onto the market. That will create good sales but little anxiety. Once the trading of homes is completed, the market with feel the underbuilt condition.

The market has been in an uptrend since last July. I will have a chart below to show the trend. It tells me that the mills can no longer produce at breakeven or at a loss. The housing demand is too great for that. I said that a few years ago so take it with a grain of salt. Economics are economics and housing leads. As of today, it is looking up. Tariffs and duties are all transitory. Stick to the fundamentals.

Technical:

I love the gap on the chart below at 812.20. I know it was the old contract, but the algo and funds don’t give a shit. The next few weeks are going to be very volatile. The market could shoot $50 in either direction for a while. What if the market ran up to $720 and then down to $620. Is your risk managed?

We are going into one the most confusing week of all of our careers. Remember things never change. We will all come out of this at some point when reality is defined. Don’t get caught up in it.

Daily Bulletin:

https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf

The Commitment of Traders:

https://www.cftc.gov/dea/futures/other_lf.htm

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

 

Brian Leonard

[email protected]

312-761-2636

13 Mar 2025
Agriculture, CME, Corn, Futures, Grain, Market Commentary, Market Updates, Other News, Research, Risk Management, Soybeans, USDA Report, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: FEB 14 – March 12 USDA REPORT

First Glance:

Quiet report with no real changes made in production. The dark cloud over the market of tariffs was not addressed in a major way in this report as the demand picture remains blurred by how long the trade war could last. Nothing from the report changes the trade in a meaningful way for corn, soybeans or wheat.

Corn             24/25 US Corn Stocks:  1.540 BBU (1.516 BBU Estimate)

                       24/25 World Corn Stocks:  288.94 MMT (289.93 MMT Estimate)

                       24/25 Brazil Corn Prod: 126 MMT (126.07 Estimate)

                       24/25 Argentina Corn Prod: 50 MMT (49 Estimate)

 

  • Corn had a boring report with balance sheets remaining unchanged across the board. Global corn stocks were slightly lower and China imports were 2 mmt lower. Corn needs to get through technical resistance at the 50 day moving average ($4.59 ½) to see a move higher, it is currently trading at $4.55.

 

Beans        24/25 US Bean Stocks:  380 MBU (379 MBU Estimate)

                    24/25 World Bean Stocks:  121.41 MMT (124.56 MMT Estimate)

                    24/25 Brazil Bean Prod: 169 MMT (169.18 Estimate)

                    24/25 Argentina Bean Prod: 49 MMT (48.88 Estimate)

 

  • Beans did not receive much news as US bean stocks remained the same while lowering world ending stocks 2.93 mmt. The one item of note is that the USDA lowering the seed usage 3 mbu, potentially hinting at a lower bean acre number.

 

Wheat        24/25 US Wheat Stocks:  819 MBU (797 MBU Estimate)

                     24/25 World Wheat Stocks:  260.08 MMT (257.62 MMT Estimate)

 

  • Wheat was slightly changed this month with larger supplies, higher consumption, reduced exports and an increase in ending stocks. Exports were lowered for the EU, Russia and the United States. While not by large amounts (0.9 million tonnes) it was enough to move the market slightly lower with no big news in corn or beans.

Overview:

A quiet report as the market looks elsewhere for news to dictate trade. As China gets involved in the tariff war with Canada and Trump steps up tariffs on some imports while delaying others, there remains more questions than answers. News from the White House will be the main market mover moving forward until the planting intentions report at the end of the month. While South American weather is not a problem currently that is always a variable to keep an eye on as their second crop begins to take shape.

Note from the report: “The WASDE report only considers trade policies that are in effect at the time of publication. Further, unless a formal end date is specified, the report also assumes that these policies remain in place.” This is important because US tariffs on Canada and Mexico were delayed until April 2 on all products covered by the USMCA meaning theses numbers are estimates if this is resolved before then.

Equity Markets

The equity markets have given up all gains since the election in November as trade wars and tariffs dominate the headlines with the chip stocks and market leader Nvidia getting hit hard as recession fears ramp up. The global markets, after lagging the US markets for several years coming out of Covid, have ramped up recently, having a better start to 2025.

Via Barchart

Other News

  • The tariff war is up and running as everybody tries to out tariff each other. How long this lasts will ultimately decide how much economic damage is done.
  • Canada has a new Prime Minister after Trudeau stepped down and Mark Carney from the liberal party took the position.

17 Feb 2025
Agriculture, CME, Corn, Education, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, Weekly Prices, Wheat rcmagserv 0 comment

AG MARKET UPDATE: JANUARY 27 – FEBRUARY 14

Corn rode the wave higher following the updated USDA numbers in the January report with old crop prices settling into a range and 2025 steadily moving higher. The funds are long 1.8 billion bushels and staying long which is helping this market higher with the general fear being a huge corn acreage number for this year that could present a problem. South American weather remains consistent with non-threatening forecasts while the US has a striking cold few days coming. There are multiple items supporting a continued grind higher from here, but funds have their hand on the scale so keeping an eye on what they do and what the technicals are saying will be important as well as harvest data out of South America. It is never too early to look at making sales for the 2025 crop year once you know your breakeven. You can always look at re-owning it on paper if the market really makes moves higher.

Via Barchart

Soybeans have been trading flat since the January USDA Report bump. South America’s record crop present price challenges to the US as we are not the main supplier for the world anymore. A renewed trade war with China would certainly have negative effects again on the soybean market. South America yield numbers and any tariff wars will be the main news in the market until planting begins. Beans inability to continue the rally like corn is not surprising but the corn-bean price ratio that we are seeing is going to make for some interesting conversations when planting is decided.

Via Barchart

Equity Markets

The equity markets have been volatile as we start the year with the Magnificent 7 taking a break while managers repositioning for expected moves (or lack thereof) from the Fed. With the constant talk of tariffs and then delays to implementation, it provides a volatile market within different sectors.

Via Barchart

Other News

  • Wheat has moved higher recently with record cold weather and winterkill concern driving it to a technical breakout.
  • Livestock prices have pulled back this month but are still at strong prices as the head count in the US remains on the small side.
  • Tariff announcements remain at the top of mind of the markets as uncertainty is the main issue with no clear guidance and kicking the can down the road.

Drought Monitor

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

 

10 Feb 2025
Agriculture, CME, Hedging, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: The dynamic of supply and demand guides most commodities markets

The Lumber Market:

The dynamic of supply and demand guides most commodities markets. Admittedly some do have a slight amount of emotion added to the trade. Not here. Lumber is different. Most of the trade is based on opinions, emotions, and rumors. Supply and demand factors are secondary. We all know it as a fact and have learned to trade the whole package. This last go-around in futures was a perfect example of the smooth-out cycle that many economists embrace. The thought is pricing smooths out over time. Not in a few hours. While I agree with the theory, I have never enjoyed it in lumber. You are never hedged in this market, and that lack of hedging allows for wide swings. Wide swings kill margins, and reduced margins bring in more caution. Today, everyone wishes for higher prices to bolster the bottom line. A $600 2×4 looks much better on the books than a $400 one. We are seeing a market in the greatest smoothing out period in its history after a run to $1700. It takes time and pain. What a western Canadian producer is at has little to do with the market. Times have changed.

We continue to seek a tighter supply environment to raise prices. This is year three of that strategy. At this pace, the mills could continue to hover around break-even indefinitely. How do we survive in this environment? With SYP and Euro not embracing the cutback strategy, the pool of wood is always available. They always look to sell their wood, which is negative. This leaves the battle between SPF and the marketplace.

There are always chances for a commodity to see sharply higher prices when not warranted. Today, lumber is one. At no time should emotions warrant higher prices when a market doesn’t have the dynamics, but they do.

The trend will be down in the next couple of months as housing stays flat, but prices will spike up and back. The market gives up $30 to $50. Don’t look to add more to it. Trade what it gives you.

Now for today:

 The futures market has recovered 50% of this move. 596.30 is 50%, and 61% is 605. Without the algo selling, we could see higher prices, but they will eventually appear. For the next few weeks, the mills will try to dig in. Owning cash today will show a profit.

 

Daily Bulletin:

 

The Commitment of Traders:

About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.
Brian Leonard
312-761-2636
27 Jan 2025
Agriculture, CME, Futures, Hedging, Housing, Lumber, Market Commentary, Market Updates, Research, Risk Management, Weekly Prices rcmagserv 0 comment

LEONARD LUMBER REPORT: It was a tough week with selling pressure dominating

Recap:

It was a tough week with selling pressure dominating. Who was selling? Most likely an algo that doesn’t grow a position. But I think the bigger question, and one that may linger for a few quarters, is why there isn’t much support on the way down. A quote Friday after existing home sales came out was troubling.

“On an annual basis, existing home sales (4.06 million) declined to the lowest level since 1995, while the median price reached a record high of $407,500 in 2024.” By the way, multifamily construction hit a record last quarter. The industry is very reluctant to participate beyond the contracts that they deal with.

New home sales do better as the existing inventories get sold. Today, with the higher interest rates and record costs, that won’t be happening any time soon. That leaves us in the same atmosphere in 2025 as it was in 2023 and 2024 when the builders created the market. That gives us the duty rally, the tariff rally, and finally, the shutdown/supply rally. At no time does it chase the industry into the marketplace to load up.

If nothing else, the trade is consistent. It made a high and then came back down to value, or at least what the charts call it. We spent a lot of time trading like this at $520. Value is determined by the volume traded in that area. $565 has had a lot. Have we moved our value area from 520 to 560? Too early to tell. The algo type selling strains the market but doesn’t represent it. The industry’s next move will. Just remember, business isn’t dead.

Daily Bulletin:
 
The Commitment of Traders:
About the Leonard Report:

The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.

Brian Leonard

[email protected]

312-761-2636

27 Jan 2025
Agriculture, Corn, Cotton, Education, Futures, Grain, Hedging, Market Commentary, Market Updates, Research, Risk Management, Soybeans, Uncategorized, USDA Report, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: DECEMBER 10 – JANUARY 25

A lot has happened in the corn market since our last update, from a new administration taking office to a surprise USDA report. The final yield and stocks for 2024 came in well lower than previous USDA estimates leading to a solid rally for a market that needed it. The USDA lowered the final average yield to 179.3 bu/ac, down from their estimate of 183.1 bu/ac in November. The market had been priced in for a 182+ yield so as you can see in the chart below the market responded appropriately. The market popped higher to reach new 6-month highs following the report and has continued higher with funds having long positions in the market.

Via Barchart

Soybeans’ also got a bump following the January USDA report. The USDA lowered the US crop from 51.7 bu/ac in November to 50.7. The yield cuts worked through to ending stocks but did not completely match as demand numbers were slightly trimmed with harvested acres raised. The Biden administration did not help out the SAF industry on their way out as bean crush plants remain in limbo on its future as a less eco friendly Trump administration takes over. What was projected to be a huge win for soybean growers now is a cloud that you do not know how long it hangs around before it rains. South America’s yields were barely changed with their forecasts now the most important thing to the markets (outside of President Trump starting any trade wars).

Via Barchart

Equity Markets

The equity markets have had a volatile end to 2024 and start of 2025 but overall seem to be in a good place as Q4 earnings start to come in. A wave went through the market with Chinese DeepSeek coming out with an opensource AI model that is much cheaper than anything in the US. This caused tech stocks to plummet to start the week with Nvidia losing over 15%. With no immediate tariff action by the Trump administration the market sighed some relief as this administration appears to be taking a more measured approach than in President Trump’s previous term.

Via Barchart

Other News

  • The USDA’s revisions lower were both surprising in a positive way and frustrating how they were so wrong on the data the market traded for the last few months when farmers had to sell.
  • The Trump administration had their first spat over deporting illegal immigrants with Colombia president Petro while mutually threatening tariffs over the handling of the situation.

Drought Monitor

Contact an Ag Specialist Today

Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or [email protected].

 

Disclaimer

RCM Ag Services is a registered DBA of Reliance Capital Markets II LLC. Trading futures, options on futures, and retail off-exchange foreign currency transactions are complex and involve substantial risk of loss and are not suitable for all investors. Loss-limiting strategies such as stop loss orders may not be effective because market conditions or technological issues may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. There are no guarantees of profit. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. You may lose all or more than your initial investment. You should not rely on any of the information herein as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments. Opinions, market data and recommendations are subject to change without notice. Reliance Capital Markets II LLC shall not be held responsible for any actions taken based on this website or attached links. Parties acting on this electronic communication are responsible for their own actions. Past performance is not necessarily indicative of future results.