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25 Sep 2020
Agriculture, Corn, Market Commentary, Market Updates, Soybeans, Wheat rcmagserv 0 comment

Ag Market Update: September 19 – 25

Corn was hit hard on the week as grains pulled back from their great run over the last month. As equity markets fell this week with a rise in Covid-19 in European countries, grains followed. Pullbacks this year are normal as harvest gets going. Harvest should get off to a fast start as weather in most areas looks good with no widespread rain, although it does not appear to be enough to delay harvest too much – even as cooler temperatures roll in. The lack of export news on Thursday did not help as this week’s drawback continued, and fell back to levels we saw last week. New sales heading into the weekend will give the bulls some good news, but everyone will be looking to the weekend to see how much progress is made on harvest and the yields we see. The Dec ’20 chart is below.

via Barchart.com

 

Just like corn, soybeans fell this week as a pullback on the grains hit them hard. Like mentioned above for corn, beans face pressure as harvest begins and the great weather outlook for it. The lack of any sales Thursday put more pressure on the markets, and beans felt the full weight of it as they will need continuous bullish news to keep them high after such an impressive run in the last month. Friday will be important as the bulls need purchases to continue and the bears are looking for large numbers to come out of harvest over the weekend and lower sales. China also believes they will be able to have another crop in some areas not flooded, so they may look to continue restocking their reserves with a mix of Chinese grains and imports. The Nov ’20 chart is below.

via Barchart.com

 

Wheat followed the lead of corn and beans this week as it sunk lower after solid gains the past month. It is still in the same area as it was trading last week so it has not seen near the pulldown that other grains have. Keep an eye on the Black Sea area for any surprises that could give them a boost or further reason to fall as export news seem tired on the market.

 

Dow Jones
The Dow fell on the week as a market-wide pullback/correction hit hard along with Europe beginning to face Covid-19 struggles again. The tech pullback continues after its incredibly strong run since the market collapse this spring. As we know with any election year, and maybe this one the most, expect volatility in the market along with the 2020 volatility we have seen. The chart below shows the daily volatility/ranges we have seen along with the drawbacks.

via Barchart.com

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.

21 Aug 2020
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Soybeans rcmagserv 0 comment

Ag Markets Update: August 15 – 21

Corn stayed level on the week after last week’s rally from the storm damage. Pro Farmer Tour is on the road this week looking at several areas across the midwest. The markets will be keeping an eye on them as they try and assess the damage of the storm and how many bushels were lost as well as the potential yields in areas not affected by the storm. So far the PFT has shown better than expected yield potential for Ohio, Indiana, Nebraska and the Dakotas. The parts of Iowa and Illinois to miss the storm look strong as well but storm damage is ultimately what people are holding their breathe for. Parts of western Iowa that were not affected by the storm have had another problem of their own, a severe drought that is going to cost the area bushels as well. All eyes and ears will be on the PFT as they try and estimate how many acres/bushels were lost to the derecho; more than expected expect another small rally, less than expected we could see another retreat as we head into harvest season.

 

Soybeans saw a small boost this week as China continues to be a major buyer. PFT is also looking at beans and making estimates based off pod counts so that has been a market mover this week as well. Bean pod count numbers are running well ahead of last year and historical averages, which indicates the bean crop still has above trend line potential which is bearish at these levels after the recent 54-cent rally. Several areas are in need of rain as well in the next 10-14 day window that look relatively dry for most areas continuing the trend of the past couple of weeks. At this stage beans still have plenty of ways to go to get to harvest ready so keeping an eye on them as August comes to a close will be important as well as always keeping an eye on export numbers.

 

Cotton prices gained on the week as strong exports and the concern of the possibility of a tropical storm in the gulf grew. West Texas has already had many weather issues, but the south has had a good year so far for growing but a storm with strong winds could change that. China was the biggest buyer of cotton on this weeks export report with 13 total buyers. This is promising as it would appear that other countries demand is beginning to come back after a summer of shutdowns has kept exports low. The US dollar continues to struggle providing some support for US commodities on the world stage. Continue keeping an eye on China as more rains continue to affect the Yangtze River as it reached new record water levels this week. The US and PRC look to continue trade talks in the coming days so expect any news, positive or negative, to affect the market.

 

Via Barchart.com

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

24 Jul 2020
Agriculture, Corn, Cotton, Market Commentary, Market Updates, Soybeans, U.S. Dollar rcmagserv 0 comment

Ag Markets Update: July 18 – 24

Corn held relatively steady this week after falling the past few weeks due to the June crop report. Exports have stayed consistent, but the lack of any weather problems is keeping corn in the range it is in. The cooler forecast with enough rain to support the crop is going to prevent upward price movement with the possibility of a 178 (trend line) yield still in play. China is the main buyer of U.S. Corn right now as major rains that are threatening the Three Gorges Dam area and throughout the Hubei Province have wiped out much of the non-U.S. crop.

The U.S. Department of Agriculture announced China’s largest ever corn purchase from the U.S. on July 14, totaling 1.762 million metric tons for delivery in 2020-21, and U.S. Grains Council President and CEO Ryan LeGrand tells Agri-Pulse that it’s more proof that demand is on the rise.

“We’ve always believed the demand is there,” LeGrand said. “They have been suffering from African swine fever, but they’re ringing the bell on these corn purchases.” (Ag Week)

Continued Chinese buying would be some good bullish news to balance out the bearish good weather news.

Soybeans gained on the week to reach the $9.00 mark again. China made several large purchases of U.S. soybeans this week despite the continued rising political tensions. The same destructive rains in the Hubei province that are wiping out corn will continue to have China buying U.S. ag products to make up for their potentially huge loses. The crop condition report this week was uneventful and as we approach the important stage for soybeans they look to be in good shape with the forecast being friendly as well. Beans have seemed to have had support at the 20 and 50 DMAs recently, so that should help moving forward even with the positive forecast.

A West Texas drought has been supportive for prices, but the lack of demand is the ultimate issue as prices can only move so high. If a healthy amount of rain moves into West Texas, look for prices to fall as a good yield and no buyers would present another problem. A weakening U.S. dollar may also provide some help as a lower U.S. Dollar means U.S. cotton is more affordable to other countries. In Other News see more info about the weakening U.S. Dollar.

 


U.S. Dollar
The Dollar has fallen 9.1% and made new 9 ½ month lows in today’s trade. With record U.S. debt and another stimulus package on the way, the Dollar has devalued endlessly by continuously running printing presses in DC. This is generally good for commodities as it indicates raw material inflation is on the horizon and that U.S. prices become more competitive as other currencies rally against the Dollar. Even though mildly helpful for the Ag industry, it’s not enough to fix the current oversupply problem.


(Bloomberg)

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 4th 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 30th 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.

 

29 May 2020
Agriculture, Corn, Crude Oil, Market Commentary, Market Updates, Other News, Soybeans rcmagserv 0 comment

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.

22 May 2020
Agriculture, Corn, Market Commentary, Market Updates, Meats, Soybeans, Wheat rcmagserv 0 comment

AG MARKETS UPDATE: MAY 16-22


Farmers in the Midwest are saying what we’re all thinking – “enough of the rain already!” There has been major rainfall, and even flooding, across most of the Midwest including Michigan, Illinois, and Southern Ohio over the past month, and without a drier outlook over the next week, there’s the potential for planting to be pushed back up against the “prevent plant deadline” in those states. Across the rest of the country, planting is still on a good pace and flat prices week-over-week show little news in the markets. Ethanol production ticked up last week but will need a much larger demand to use up the massive amounts in storage. With exports falling within expectations trade looks to remain calm as we head into Memorial Day weekend and the start of summer.

U.S. Soybean planting, like corn, has continued its good start in most areas except for North Dakota. Bean prices took a big hit on Thursday despite a 22-week high in sales of 1.205 MMT with 738k tonnes going to China. The possibility of increased political tensions as President Trump fired off more tweets criticizing China pulled the markets lower after a good week. Along with Australia’s wanting the WHO to investigate the origins of the coronavirus outbreak, Trump’s tweets are another thing in a long line of issues that could come between the U.S. and China’s phase 1 trade agreement.

(Food Business News)

Wheat has seen a boost this week as the Russian wheat crop yield appears similar to last year. The excess rain in parts of the US with SRW has lead to some worries about the crop and the possibility of worsening conditions. There has been a pickup in domestic demand as mills around the country are opening back up and demand ramps up. Keep an eye on Russian Wheat as another big cut to their yield would be supportive of U.S. wheat prices along with further weather problems domestically.

There’s been a lot going on in the meats sector – specifically when it comes to COVD-19 impacting American production plants.

COVID-19 has infiltrated America’s meatpacking plants causing them to slow processing speeds, or close all-together… Converting livestock into the cuts that get to your plate requires massive facilities, intensive labor, and working in tight quarters which makes it difficult, if not impossible, to control the spread of a contagious disease. Without the ability to “socially distance”, thousands of plant workers have become ill, some have died, while many others are too afraid to go to work. The repercussions of the Covid-19-related plant disruptions will impact our food system for years to come. Once the smoke clears, owners of large meat packing plants may look to create smaller, regional facilities meaning consumers can expect higher prices, and fewer choices in the coming weeks and months.

Check out more short-term and long-term repercussions in the rest of our blog here.

 

CFAP Relief Package
The USDA came out with more information this week about the CFAP Relief Package. 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. Sign up starts next Tuesday the 26th at your local FSA office. For more information on how to sign up, check out this video.

Via Barchart.com

15 May 2020
Agriculture, Corn, Cotton, Crude Oil, Soybeans rcmagserv 0 comment

AG MARKETS UPDATE: MAY 8-15

Corn planting in 2020 continued its strong pace last week as the crop is estimated to be at little less than 70% planted. This is well ahead of last year’s pace and with favorable weather outlooks for the rest of May, the crop should be 100% planted by June.

USDA Report
The May USDA Report came out on Tuesday and it’s safe to say it came of little surprise to most – the ‘19/20 US Corn Stocks were a little lower, while ‘19/20 World Corn Stocks were a bit higher.

The main adjustment was made in the Ethanol Corn numbers in ‘19/20 where they cut 100 million bushels. With Ethanol production averaging 17% lower than last year’s number through August, another 100 million bushels would need to be cut to meet lower demand. Even with the country opening back up, there are still uncertainties on demands as more people are interested in a car ride over jumping into a plane. Ultimately, this report just confirmed what everyone already knew: the world is drowning in corn. With a great start to planting and estimates of a trend line yield of 176+, this problem looks to continue for corn as the year goes on.

U.S. Soybean planting, like corn, continued its streak. As mentioned last week, China is well behind pace to meet the amount of ag goods purchased from the U.S. from Phase 1 of the trade agreement meaning U.S. bean prices are at the mercy of Chinese consumption. As political tensions continue to hover over the markets, prices will be dependent on U.S. and China political and/or export news. With the May USDA report being neutral to bearish, it has turned into a waiting game in the bean market as they continue to wait for buyers.

In the meats sector there is currently a disconnect between futures and cash prices; futures price is roughly $15-20 under the current cash price showing an immediate need for beef. The market is showing the packer margins are phenomenal and because of that, the packers are trying to throw the ranchers a bone by offering over the futures price, but not anywhere near the margin difference they are making. In essence, the packers are buying for relatively cheap and selling for a lot more than they usually would as supplies are tight. This is part of the reason the Trump administration is looking into the meat industry, as several large players are foreign-owned. China will not be buying any cattle from Australia due to their criticism over their handling of COVID-19, so some of that demand may be filled from the U.S. but seeing as we are struggling on our end with production, that would put another strain on the market.

Cotton looks to be experiencing a short squeeze this week on July futures. The Midsouth is behind on planting due to cool weather over the past couple of weeks; soil temps need to be above 65 degrees for planting and the mid-south has had several nights in the low 40s in May.

Cool temperatures are a little surprising this time of year, but I think we’ll get through that fairly unscathed. It’s warming up pretty fast, so it shouldn’t hurt us too badly. Dan Fromme (AgFax)

Cotton needs manufacturing around the world to ramp up as countries begin to drive demand. The USDA report this week was neutral-to-bearish and cotton has managed to hold on to most of its gains making short speculators nervous. They’ll be keeping a close eye on Thursday exports as there’s only one month remaining in the July futures contract. Buying from China, like with any other commodity right now, would be a welcome sight.

Relief Package
The House is expected to vote on another round of financial stimulus equaling out to $3 trillion. In this bill, $16.5 billion may be earmarked for direct farm payments and help for the ethanol and biofuel industry. It may also direct the USDA to reimburse any livestock producer that had to euthanize animals due to closed processing facilities (more on that here).

Disclaimer

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