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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 1st. This would be great news heading into the end of 2020 and also right before the election.

28 Aug 2020
Agriculture, Corn, Market Commentary, Market Updates, Soybeans, Weather rcmagserv 0 comment

AG MARKETS UPDATE: AUGUST 22 – 28

Corn saw solid gains on the week as large exports and continued weather problems were the market movers. The western corn belt looks to continue its dry run in the coming week with no widespread rain expected in areas that have been suffering from drought. This will put more strain on the crop as we head into harvest. The crop, especially in Iowa on top of the storm damage, has been fighting drought conditions most of the summer in the western corn belt so an already strained crop doesn’t look like it will get much help coming down the stretch. Large exports this week also helped give a boost as China is stepping up their purchases over the past month. Along with the rally in Dec ’20 prices the ’21 crop has gotten a boost as well to much more attractive levels than a few weeks ago. The chart below shows the rebound back to levels we last saw around the 4th of July. It is possible we have already put in a low heading into harvest as weather outlooks, crop conditions and exports have been favorable for prices as of late. Unfortunately favorable for prices does not usually mean favorable for the crop so hope exports continue because any good weather news to help the crops would be bearish for prices.

Via Barchart

 


Soybeans saw a major bounce this week as weather concerns and Chinese buying drove the market. As soybean yields are still at a higher risk than corn at this point in the year the dry weather outlook could cause some damage to the crop. Like corn, the areas already in drought conditions will continue to hurt along with areas that have just started struggling look to continue into September. The continued exports to China are promising as consistent buying in bulk would be promising of long term Chinese demand. As everyone likes to see prices going higher for this year after a long year of Covid-19 and weather, do not forget to be thinking about the ’21 prices if the rally continues where you could sell forward some of your production for ‘21 or gain some premium for storing until next summer. If China continues making purchases and the weather remains grim look for this rally to continue or hold until there is news to stop it.


Via Barchart

 

Hurricane Laura
Hurricane Laura slammed the gulf coast in eastern Texas and western Louisiana as a category 4 storm. The hurricane will bring 5-10 inches of rain and heavy winds to the western Mississippi Valley. As the storm is expected to turn northeast and dump rains on the southern Ohio Valley this weekend it will miss the areas that need the rain the most in the western corn belt. Seeing the destruction brought by the storm along the coast our thoughts and prayers are with everyone affected. (Check out some more thoughts on a hurricanes effect on futures markets from our sister company here)   

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)

17 Jul 2020
Agriculture, Corn, Dow Jones, Other News, Soybeans, Wheat rcmagserv 0 comment

Ag Markets Update: July 11 – 17

Despite one of the largest single export sales to China ever, prices for the week fell. After some welcome rains in the past week in areas that were dry, favorable outlook during pollination has the potential to help make this crop large. Ultimately, as yield potential continues to look high, big bumps in corn are looking slim unless there is a surprise in forecast changes or export sales. The crop conditions continue to look strong as you can see in the chart below. We are not near/at record conditions, but still have very strong numbers at this point in the year. A dip in condition would factor into price movement as well, but don’t don’t plan on that for a big boost towards the end of the month.


Soybeans had a flat week price-wise as steady sales continued to China and forecasts didn’t change too drastically. We started out the week with some prices drops, but a solid midweek bounce helped get back to flat as we head into the weekend. Look for any big forecast changes or unexpected purchases to be the only thing to move bean prices in the near future. As world demand has seen an uptick, the U.S. may find more buyers as South America has been so busy selling up to this point, they may have trouble fulfilling any additional large exports.

 

Large purchases from China gave Wheat a big boost halfway into the week. Wheat did have to give a good chunk of that boost back the following day due to a lack of confirmation on purchases, but any Chinese purchases at this point are beneficial to the markets as other Wheat growing countries are seeing lower yield numbers. As you can see below, markets are well off the lows that we set a few weeks back as Wheat has made a solid rebound. Just like with Soybeans, more confirmed purchases, or any purchases for that matter, would be beneficial to U.S. Wheat.

 

Dow Jones
The Dow saw positive numbers overall for the week with a few days of solid gains and small losses. Americans continue to keep their eyes on places that are reopening and spikes in major metropolitan areas. Retail spending was up +7.5% last month, but some experts think we may see that shrink as some states have rolled back their opening phases where cases have spiked. President Trump wants schools to open this fall as he sees that as a way to get more people back to work, so the rolling out of back-to-school plans be an important factor on the economy heading into election times.

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