It was a volatile week in the markets, Randy Koenen of Red River Farm Network said on the Agweek Market Wrap. Randy Martinson of Martinson Ag Risk Management concurred, saying it was the kind of week where the motto could be “be patient, wait a minute, because it’s going to change.”
Martinson said the short week started rough, in part because of a “flip-flopping forecast” but also because of reports of wheat imports from the European Union and soybeans from Brazil. With expectations of an adequate supply already in the U.S., the market took a bearish turn on more being brought in.
Koenen pondered whether the strength of the U.S. dollar was the reason behind the imports, and Martinson said that was part of it. But it may be more a statement on transportation; he said it’s possible that some buyers could bring in wheat from Europe or soybean from Brazil faster than they could get them from St. Louis. But it also could be buyers looking for specific quantities or qualities, he said.
Martinson said a weather market is underway now, with the central and eastern Corn Belt without “decent, measurable rain” since early May and drought still raging in the western Corn Belt. Plus, it’s dry in much of the northern Plains while other parts are still having some planting troubles. Koenen added that the Drought Monitor on Thursday showed the line from Nebraska to Indiana getting worse.
Martinson said he’s heard horror stories of a fraction of planted corn populations making it out of the ground in Nebraska. And, in the Texas Panhandle and Kansas, which were so dry that winter wheat abandonment was high, thoughts of double cropping soybeans are gone because of excessive rains. Instead, a lot of acreage will get put into cattle feed crops, Martinson said. He explained that producers in Kansas often graze winter wheat in the boot stage, to protect against late freeze, then take cattle to pasture when conditions improve. This year, there was little wheat to graze, so cattle went straight to pasture. Without more feed crops, the cattle herd in that area will continue to decrease.
Koenen said that adds up to the big yields that the U.S. Department of Agriculture expected “going away, day by day.”
Martinson said global troubles will play in as well, with much of China’s wheat crop expected to be livestock feed quality due to excessive rain, putting the country in a position of importing human food quality wheat.
Like the crop markets, Koenen said the lean hog market this week was “not for the faint of heart.” Martinson said it was limit up and sharply higher early in the week, struggled on Thursday but went back up on Friday. Hogs had gotten so cheap, he explained, that they had to go up. There were rumors of government purchases as well as strong consumer demand. With the debt ceiling taken care of, the Federal Reserve saying it won’t increase interest rates right now and other positive economic markers, it helped “keep barbecue season going,” Martinson said.
He had two main things to watch going into the next week.
“Weather is going to be the major driver,” he said. Hot, dry conditions will be especially influential.
The second factor to watch is the World Agricultural Supply and Demand Estimates, due out next week. While Koenen pointed out the June WASDE is not usually a big mover of the markets as changes usually don’t come until the acreage report at the end of the month, Martinson said it’s possible there will be estimates pointing toward the acreage numbers. He expects less corn and wheat acreage and more soybeans.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)
Jenny Schlecht is the director of ag content for Agweek and serves as editor of Agweek, Sugarbeet Grower and BeanGrower. She lives on a farm and ranch near Medina, North Dakota, with her husband and two daughters. You can reach her at firstname.lastname@example.org or 701-595-0425.
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