us dollar Archives - RCM Ag Services

20 Aug 2021

Corn, Grain, Market Commentary, Market Updates, Research, Soybeans, Weekly Prices rcmagserv 0 comment

AG MARKET UPDATE: AUGUST 12-19

Corn fell on the week tied to better than expected rain totals and uninspiring demand news. Weather over this weekend is expected to provide relief in some areas before normal late summer weather returns to much of the corn belt. Exports were good but lagging this week and as we have seen recently we need consistent and strong buying, not just good. Thursday’s strong downturn was commodity wide as all grains and energies struggled. The western corn belt is expected to get rain this weekend – it needs it – as you can see in the drought monitor below. We are still within the pre-report trading range so how the market trades on Friday and rainfall over the weekend will be the market movers the next couple of trading days.

Via Barchart Soybeans, like corn, fell on the week lead by the losses on Thursday. Bean oil and meal also struggled over the last few days as world demand remains in question going forward. The rains expected over this weekend should help the bean crop more so than corn in those areas so the actual rainfall received will be important come Sunday night. Like corn, exports were good but not great and we NEED great to get people excited. If we see China buying new crop beans (or corn) in the coming weeks that would be welcome support for the market that is needing direction. The Biden administration has yet to make up their mind on what they want to do with biofuel mandates presenting the markets with a big question mark that they must work with for now.

Via Barchart

Dow Jones

The Dow lost on the week as markets try to solve the mystery of the Fed and their tapering while also worried about the Delta variant. The consumer demand report and weakness in China consumer demand are hanging over the markets with a possible correction on the way according to some analysts.

US Dollar

The US Dollar hit a 10 month high adding to the bearish reaction across all commodities this week. A weaker USD helps US commodities be more competitive, but we are still a long way from where we were pre-pandemic.

Podcast

Check out our recent podcast where we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real-world application of the use of short-dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

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

US Drought Monitor

The maps below show the current drought conditions with rains expected over much of the corn belt over the weekend. Last week’s is also there for comparison week over week.

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

21 Dec 2020

Agriculture, Corn, Market Commentary, Market Updates, Soybeans, Weekly Prices rcmagserv 0 comment

Ag Market Updates: December 12 – 19

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

Via Barchart

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

Via Barchart

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

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

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

Weekly Prices

Via Barchart

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

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)

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