Tag: world weather

24 Jun 2022

AG MARKET UPDATE: JUNE 9 – 23

Corn had a rough week along with the overall commodity selloff the past few days. While the weather forecast has become cooler it is still going to be hot, and a lack of rain remains across much of the corn belt for the next week with higher chances in the 2-week forecast.  Do not be mistaken – we are in a “weather market” where positions will change along with the forecasts.

Outside of weather, it has been the funds who have helped propel the move higher over the past year – naturally, when funds liquidate their large long position, you get a gut punch like we’ve seen this week.

With unknown weather, a potential recession looming, and fund profit taking the current market condition are flat out tough to speculate on and require the utmost discipline and focus on profit margin management.

The Planted Acreage and Quarterly Stocks report comes out next week followed by a 3-day weekend for the 4th of July.

Give us a call today to get your plan set for tomorrow (i.e next week!) 312-858-4049.

Via Barchart

Soybeans suffered like corn from the cooler forecast and long liquidation this week. Collapsing world veg oil prices added pressure with the forecast change. Chinese Covid lockdowns and continued political friction will be in and out of the news but will always spook the markets. Beans and corn will be weather sensitive going forward but have suffered from outside forces like potential recession and lockdowns as well. The planted acres and stocks report will be important next week as well as weather over the 3 day 4th of July weekend.

Via Barchart

Wheat suffered along with other commodities with indications that Ukraine may be able to export more wheat than originally expected (not sure if this will come to fruition as the destruction of ports and shipping paths is continuing). Russian production estimates have risen, adding to the questions about what will be produced in Russia and Ukraine to be exported. The losses in wheat in recent weeks is confusing as the US yields are not spectacular, war continuing in Ukraine, and India is still in a drought, none of these are bearish factors yet we have come well off the highs.

Via Barchart

Equity Markets

It has been a bad past couple weeks for the equity markets as they fell lower following the Fed raising rates 75 points and lots of debate of a recession in the future. While the Fed tries to make up for late moves and inflation continues to affect the country it is important to look what has gotten us here. As companies are likely to lower future earnings expectations, it will be important for markets to figure out fair value after the last 2 years of staggering valuations.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

There is an agriculture tug of war happening across the nation, impacting America’s farmland. Fertilizer prices are continuously fluctuating, and it has us taking a page the “The Clash” should we stay, or should we go?! And we aren’t the only ones. Many farmers are asking their agronomist and chemical salespeople, “what will fertilizer cost me the rest of the season, and what are my options if I don’t want to go all-in on my typical fertilizer treatment plan?”

In this episode of the Hedged Edge, we are joined by a special guest who needs no introduction in his local circle, Dick Stiltz. Dick is a 50-year veteran of the fertilizer and chemical industry and is the current Agronomy Marketing Manager of Procurement fertilizer and crop protection at Prairieland FS, Inc in Jacksonville, IL. He is at the pulse of the current struggle and here to discuss the topic at hand.

 

 

Via Barchart.com

 

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 blawrence@rcmam.com.

 

29 Apr 2022

AG MARKET UPDATE: APRIL 21 – 28

Corn continues to move higher as planting has gotten off to a slow start in the US and Brazil’s safrinha crop is facing drought conditions, shrinking their crop. The wet and cool forecasts remain into May for the north and eastern corn belt which will make it unlikely to see much planting progress in those areas. The rain will be welcome in the western corn belt that has been dry and making slow progress in planting, but the rain will be welcome for the soil even if it slows planting for a day or two. The ongoing conflict in Ukraine continues to decimate their infrastructure as Russia destroys ports and has seized stored corn to sell as their own. China was a buyer of corn this week and will hopefully continue to show up on exports as demand from other buyers has slowed. Limits have been increased at the CBOT for some commodities and corn will now have a 50 cent limit starting May 1 from the current 35 cent limit.

Via Barchart

Soybeans had a small dip this week after its nice run higher from the previous dip at the end of March. Soyoil prices continue their move higher pulling beans with it while meal struggles. Indonesia placed a palm oil ban on both refined and unrefined product. The slow start to planting will ultimately roll into affecting soybeans like corn but we aren’t at panic mode yet. The start to the year has been less than ideal when the world stocks need a great year. Beans daily trading limit will move up to $1.15 effective May 1st.

Via Barchart

Cotton

July cotton traded limit up (7 cents) on Thursday to set a new contract high at $1.4768. Export data from last week was better than the last few weeks. Cotton’s problem appears to be a lack of world supply mixed with (so far) not ideal growing conditions in Texas. Forecasts for rain in Texas are very welcome but will need to be widespread and a large amount to help the drought. (See drought map below)

Dow Jones

The Dow was down this week as volatility continues to be in the markets as earnings continue to come across with some large companies getting crushed and others posting solid numbers. Tech companies have had a good week after getting run over the past couple months. This may not be the bottom for tech but it is nice to see some good numbers and some support.

Via Barchart

Drought Monitor

The drought monitor below shows where we stand week to week.

Podcast

RCM Ag Services put a unique spin on National Agriculture Day by going international. That’s right, we jumped right into international waters with Maria Dorsett from USDA’s Foreign Agriculture Services for an interesting discussion about linking U.S. agriculture to the rest of the world.

Each year, March 22 represents a special day to increase public awareness of the U.S.’s agricultural role in society, so why not take it one step further by bringing in a global component? As the world population soars, there’s an even greater demand for producing food, fiber, and renewable resources. That’s why we’re taking a deeper dive into the USDA’s trade finance programs, like the GSM-102, which supports sales of U.S. agricultural products in overseas markets and supports export growth in areas of the world that are seeing some of the fastest population growth.

So, jump aboard (no passport needed), as Maria discusses how U.S. companies use GSM-102, what the program features, and the benefits that it offers!

Via Barchart.com

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 blawrence@rcmam.com.

28 Jan 2022

AG MARKET UPDATE: JANUARY 20 – 27

Corn continued its rally this week as grain bulls and inflation continue to drive it higher. The yield losses in South America continue to have news around it as the reality of significant losses begins to set in. Too much rain and heat or not enough rain and heat have been driving the issues, with very few areas having excellent growing conditions. With the Chinese New Year coming up, China will disappear from the export reports for a little bit, but once they come back, the market will have a better idea of where Brazil and Argentina sit. If the rumored losses come to fruition, we could see China increase its purchases. Corn has continued its rise while wheat struggles to make up its mind with confusion around the Russia and Ukraine situation. Any escalation there will result in more bullish factors in the market. Despite some volatility, energy prices continued their rise, with crude oil hitting a new high this week. Ethanol plants will continue to produce even with higher corn prices as long as their margins remain strong despite resulting in less fuel consumption. Many energy companies think we could see $100+ Crude in the next few months.

Via Barchart

Soybeans continued to move this week on similar news as corn with South America’s issues and continued world veg oil strength. With strong veg oil prices pulling beans along with it as long as that lasts, we can expect some support under beans with any lower moves. Like corn, if private estimates of losses to the South American crop become a reality, we should continue this run higher. If China comes back from Chinese New Year and starts picking up bean purchases, mixed with world veg oil prices could see this rally continue. Acreage estimates for 2022 have been coming out, with Informa pegging the US bean crop at 87.8 million acres. This is slightly higher than the 87.2 million acres from 2021, but we have a long way to go before we get to that point.

Via Barchart

Dow Jones

Equities had quite the week with large intraday trading ranges as the market does not seem to make up its mind. This week, the Fed’s decision to leave interest rates as-is means we should expect a raise from the March meeting. The Fed also said they would adjust asset purchases moving forward. The tensions between Ukraine, Russia, and NATO remain a large question mark, but it appears Putin may not do anything until after the Olympics. This will be important to keep an eye on for equities and commodity prices.

Via Barchart

Cotton

The cotton market has held in this $1.20 range for the last ten trading days. World demand is there, and this bull market could have room to run if inflation sticks around with other supply chain bottlenecks. We could continue to see this strength last into the spring when planting starts until we get a better idea of what the U.S. cotton crop will look like this year. With rising consumer demand, the cost of production and transportation in the next few months could see volatility.

Podcast

Tune in as biotech guru Dr. Channa S. Prakash discusses everything from Alabama football, genetics as one of the most extensive agricultural advancements, the most significant risk factors to feeding the world over the next 30-50 years, plus everything in between.

Why producing crop plants with a much gentler footprint on the natural resources will help feed the growing population. How 75% of the world’s patents in agriculture gene editing are coming from China. Understanding that trying to impose restrictions on our ability to grow food can be a considerable risk to agriculture. Listen to hear about these topics and more!

 

 

Via Barchart.com

 

 

07 Jan 2022

AG MARKET UPDATE: DECEMBER 29 – JANUARY 6

Happy New Year! Volatility has been the main storyline in the first week of 2022. There was enough surprise rainfall in the dry areas of South America to spook the markets right before the New Year before a slight bounce. This week’s ethanol production numbers were slightly below last week. Compared to the previous year, monthly ethanol production is running 9% over last year, but ethanol stocks are 8.3% below last year. Ethanol margins are still profitable as gas has rallied since Thanksgiving. The dryness and heat in Southern Brazil and Argentina remain in the forecast while northern Brazil continues to get too much rain. For reference, this time of the year in Argentina is the equivalent to June. If the forecasts prove true in the next couple of weeks, they will continue to stress the crop. Exports this week were nothing to write home about as the USDA described them as the “Marketing year low.” If South America’s crops continue to struggle, we could see an increase in exports, but the opposite could be true if the weather improves.

Via Barchart

Soybeans have experienced the same volatility as corn but remain at its highs, as seen in the chart below. The story is the same as corn being driven by weather problems in South America. Barchart estimated Brazilian soybean production at 137 million tonnes, with Argentina production at 45 million tonnes. The last USDA projection had 144 million tonnes in Brazil and 49.5 million tonnes in Argentina, showing that the private sector believes the crop has gotten worse and is trending in the wrong direction. The chart below is interesting because you can see the top at $14 this week and back in July. That will be an important number to close above to keep the momentum going.

Via Barchart

Dow Jones

The Dow has had quite a volatile week following a week of the Santa Claus rally. The Fed may increase the rate at which they raise rates which worries some investors, but at this point with the Fed, many investors are waiting until they see the plan. As a new year starts, especially following the impressive year that was 2021, many investors try to predict the story for the year ahead. If we have learned to expect anything while Covid is in the markets, we can’t predict much for the year ahead.

Via Barchart

January USDA Report

The January USDA Report is Tuesday and should be a market mover. All eyes will be on the report as everyone positions themselves ahead. If the volatility of late shows up, it could be a big market mover.

Podcast

The 2021 U.S. grain crop has the potential to be one of the largest on record. Where did all the yield come from, what areas were the hardest hit, and why on God’s green earth are grain prices still so high?

Today, we are joined by several RCM Ag Services grain markets experts from around the country to catch up on a post-harvest update and share an outlook for production and marketing in each of their respective regions for the remainder of the 2021 marketing season and the upcoming 22 crops.

 

Via Barchart.com

23 Dec 2021

AG MARKET UPDATE: DECEMBER 9 – 22

Since early December, corn has had a great run as South America’s dryness continues and delays planting in some areas. The corn crop is only about 60% planted in Argentina, which is the slowest pace on record for late December. Anything planted after January 10th will probably experience some yield drag. Their planting rate is on par with last year, but the weather has been far dryer and looks to continue going forward. As you can see in the chart below, March corn has rallied 90+ cents since early September. With continued strong basis and raises at prices, farmers have been given a gift but when the farmers choose to claim the gift and how long the gift stays available is another question. If Argentina and Brazil stay dry, this rally could continue, and we could retest the summer’s highs. Ethanol margins shrunk, and crude fell but remain at much higher than average levels, which will also support corn.

Via Barchart

Soybeans, like corn, have enjoyed a nice rally as South American weather issues cause some worry.  This week, Brazil’s bean crop had its production estimate lowered by 3 million metric tons by Parana’s crop analysis firm, Deral. While Brazil is still on pace to produce a record crop, it is not expected to be as large. They increased planting this year, so a larger crop is expected in Brazil, even with some headwinds.  The basis is holding steady around the country for beans as we head into the new year. Beans and corn are likely to move together leading up to the January USDA report.

Via Barchart

Dow Jones

The Dow had a flat week and a half with volatility due to the Omicron variant having it all over the place with several large down days followed by a good bounce. The Omicron variant’s spread has been worrisome as restrictions start to come back into play in major cities. It will be important to keep an eye on this around the holidays as we also hope to see the “Santa Clause rally.” Senator Manchin also stopped President Biden’s BBB plan as he will not vote to approve it in its current form.

Podcast

Commodity prices have perpetually soared for the past year and continue to trend higher. We’re diving into the fertilizer forecast with a unique guest, Billy Dale Strader, a branch manager for Helena Agri-Enterprises in Russellville, KY., who is truly at the epicenter of the rising fertilizer prices.

Billy Dale planted his agriculture roots on his family-owned farm and has managed regional seed and chemical sales at Helena for the past decade. In this week’s pod, we tackle the big question for farmers and ultimately end-users — is the impact of higher-priced inputs, like seeds, chemicals, and fertilizer, on the supply and demand for the major U.S. crops? Listen or watch to find out!

 

 

Via Barchart.com

16 Oct 2020

AG MARKET UPDATE: OCTOBER 10 – 16

Corn has continued its momentum up following Friday’s USDA report despite a hit to prices to start the week. Corn closed above the $4.00 mark for the first time since January on the Dec’ 20 contract (see chart below). This year has been different for many reasons but having the highest prices of the year come during harvest definitely adds to it. The “harvest lows” look to have been in August with the run up of 80 cents/bu, giving farmers hope after depressed prices all spring and summer. The USDA report from Friday came in with a yield estimate of 178.4 BPA and lowered the 2020 harvested acres to 82.5 million acres when estimates had it at 83.321 million acres. US corn harvest came in at 41% complete this week with favorable weather over the next two weeks to keep it going. Chinese purchases continue to roll in as they continue buying after their holiday break. Brazil’s weather outlook has improved in the short run to get some moisture but after this rain the long term picture remains unclear as Argentina looks dry as well.


Via Barchart

 

Soybeans rallied this week after gains last week and after the USDA report. Markets came down Monday on funds taking profit but have slowly come back over the last 3 days. The factors moving the market have been the same for the past several weeks. The USDA report from Friday estimated yields to be 51.9 bu/acre and 290 million-bushel stocks, almost 80 million below estimates. Harvest is 61% complete and looks to be full steam ahead with the promising weather across the US. As more uncertainty has come up this week with as China’s Premier Xi criticized the US in a speech regarding the US’s relationship with Taiwan. As the election nears US and China’s relationship will be stressed. What this will do to the Phase 1 agreement is an unknown, but China continues to need our beans which is helpful in the long run.


Via Barchart

 

Cotton prices rallied this week as flooding in India caused damage across large growing areas and possibly damaged up to 1/3 of the country’s cotton crop. With India’s cotton crop damage and Pakistan’s ongoing crop issues look for mills to look to the US for their cotton needs. Looking to ’21, if soybean and corn prices stay strong into the spring there will be a sizeable amount of cotton acres that shift to corn or beans tightening the supplies. Many experts think that the prices will be allowing for future demand to help prices as well.

Via Barchart

Dow Jones
The Dow continues to bounce around as there have been 3 down days after 4 up days. Europe is struggling with a possible second outbreak and the US continues to struggle with Covid-19. Election news and Covid-19 news will be the main market movers as vaccine trials are starting to have issues.

World Weather
The International Research Institute put out a forecast for the next 3-months for South America with expectations of normal rain and temperatures for Brazil with drier conditions for the for southern Brazil and Argentina’s main growing areas.  US weather looks great into November for a quick sprint to the finish for harvest.  Russian forecasts remain dry into month end which is driving wheat prices.



Via Barchart.com

08 Oct 2020

AG MARKET UPDATE: OCTOBER 3 – 9

Corn followed beans higher this week as exports continued and Brazil’s weather is still questionable as their season starts. Corn harvest in the US is 26% complete as favorable weather looks to allow for harvest to continue across the country. As Chinese buying continued following holiday, markets are keeping an eye on their purchases as the Chinese government changed laws in what can be fed to hog herds as they continue to recover from ASF. By not allowing for swill (food waste and garbage) to be fed to hogs anymore the demand for corn and meal for feed looks to increase, but it is hard to tell how much swill feed will need to be replaced. Ethanol demand has remained lower than normal as the pandemic continues, but with lower demand has also lowered production. The lower production has lead to tightening in stocks to their lowest level in 8 years. If/when ethanol demand rebounds, look for a boost in corn purchases for ethanol use to replenish stocks and meet demand. Keep an eye on the USDA yield estimates on Friday.


Via Barchart

 


Soybeans kept the rally going this week on weather concerns in South America and exports continued in large amounts. South America remains in a dry pattern that could turn into a drought if they do not get the much needed and forecasted rain in the next couple of weeks to get the beans in the field in some major growing areas. Harvest continued across the US this week as harvest is seen 36% complete as favorable weather across much of the US has allowed farmers to get off to a great start. As China came back from holiday the buying continued as feed demand in China has started to pick up despite herd sizes only being about 65% of what they were before ASF. Fund buying has also continued this week as funds now are long 1.4 billion bushels (about 10% of the expected world production in 20/21) of beans. Prices will once again be paying attention to the USDA report on Friday but do not expect anything like the last report. As you go through harvest we suggest not storing any beans as the market is currently inverted (Nov prices being better than anything in ’21) showing the market wants your beans now. Not seeing a carry in the market makes it hard to hold the beans when selling the physical and getting long futures if you believe the markets are going higher is an option.

 

Via Barchart

 


Funds continued to get long wheat this week, with some profit taking on Thursday, helping fuel the rally that other grains have seen. Weather problems in other areas of the world are helping markets move as parts of Russia remain dry and the Black Sea area has been dry but is forecasted to get much needed rain this week. Argentina like Brazil has been dry but looks to continue their dry pattern unlike Brazil. Stocks are expected to be lower in the report on Friday from the September report.


Via Barchart

 


Cotton prices rallied this week as Hurricane Delta heads toward the Mississippi Delta. The fact that there is still plenty of time for another storm before harvest after Delta worries farmers that one storm may be fine but another would present major issues. Cotton has seen a steady rise in prices since the lows back in April. Exports were good this week as there were little cancellations and strong sales to Vietnam.


Via Barchart

 

Crude Oil
Crude saw a boost this week as Hurricane Delta has shut down production in many parts of the Gulf of Mexico. This is typical of prices whenever a hurricane is in the gulf as reactions to what may happen is usually worse than the outcome.

Dow Jones
The Dow continues its bounce back despite back and forth tweets from Trump and Pelosi regarding a new relief bill and what it should look like. Big tech stays in the news as Amazon and Facebook are continuously being looked at for anti-trust violations by a bipartisan group, not much is expected to come from this but worth noting.

World Weather
Brazil has been dry causing some delays in planting but some rain this week and cooler temperatures are in the forecast so markets will keep an eye on any changes there. Hurricane Delta barrels toward the US as farmers in the south look to try and get their crops out ahead of any rain that could cause damage, especially to cotton in the Delta.

 

Via Barchart.com

02 Oct 2020

AG MARKET UPDATE: SEPTEMBER 26 – OCTOBER 2

Corn saw a big boost as a result of the surprises in the USDA stocks report this week. Corn came in 255 million bushels below estimates at 1.995 MBU, which comes back to what everyone thought that the USDA overestimated the 2019 crop. This adjustment lowers the 2019 yield by about 3 BPA, which sounds much more accurate from what we heard from talking to farmers. Ultimately, this means world stocks are tightening as Chinese demand of US grains has picked up with Phase 1 trucking on. Post-report funds continued to get long, which helped the drive up as well. Exports continue at a great pace as harvest begins in many parts of the US. Continue to keep an eye on exports and weather as any major delays to harvest/crop moisture could prevent problems although the forecast is favorable into mid-October. The chart below shows the sharp bounce back up after a couple weeks of slow losses.

Via Barchart

Soybeans had the biggest surprise of the report as ending stocks were down 42% from the September 2019 report. Beans came in at 523 million bushels, over 50 million below the average estimates. This low number on top of continued large buying from China saw a 25-cent rally after the report. Like corn, funds continued to get long post-report and are now long 1.07 billion bushels. As export numbers continue to be large and the USDA updated the stocks down, both were very bullish. Brazil’s growing season has gotten off to a good start as some areas are starting to look for rain. A good rain in Brazil would put a damper on the bulls, but with funds so long they will look to exports and harvest.


Via Barchart

 

Dow Jones

The Dow bounced back this week despite a Presidential debate that left more questions than answers. Tech continued its bounce back after it took a tumble a few weeks ago as airlines and travel industry saw a boost as more potential aid could be heading there way along with a second stimulus package is in discussion. The unemployment report on Friday will be the main market mover. But with President Trump testing positive for Covid-19 more uncertainty and volatility will be added to the markets. Any updates on his condition with it will be watched closely as we will not see any campaigning from him over the next couple of weeks.

 

World Weather
Brazil and Argentina are off to a pretty normal start as planting went well. Central Brazil will see higher than normal temperatures accompanied by average to below average precipitation. Dry and warm outlook for central Brazil to start October and Argentina has a slightly dry outlook with normal temperatures.

18 Sep 2020

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.