Is the top in for soybeans? Soybean oil situation makes it look that way
AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management talk about volatility in the soybean oil market, the big reports coming out on March 31, the growing strength of hog markets and more on this week's Agweek Market Wrap.
Grains were lower everywhere to end this week, Agweek's Michelle Rook said to start of the Agweek Market Wrap.
That includes soybean oil, which was limit down Thursday and Friday after being limit up on Monday. Randy Martinson of Martinson Ag Risk Management said that volatility is "a little troublesome" and played a part in bringing down soybean prices for the week.
Another factor, he said, is that it's been a while since the U.S. has had an export sale of soybeans, and weather conditions in South America have improved considerably.
The market, Rook and Martinson said, will get some answers with the March 31 Prospective Plantings and Quarterly Stocks reports. Martinson expects Quarterly Stocks to be the most important of the two. However, the plantings report could provide some interesting information. Industry estimates right now have soybean acres at less than 90 million. That won't be enough for demand, Martinson said.
As for corn, Martinson thinks stocks are tighter than anticipated. There is talk of feeding wheat to livestock, which would happen if corn gets too costly.
Wheat was down everywhere, largely a function of improving conditions in the main winter wheat growing states. Rainfall there has helped save and improve the crop.
"Winter wheat could be almost made with one more good rain," Martinson said.
Rook and Martinson expect spring wheat acres to be down in the March 31 report, with canola, soybeans and sunflowers picking up the acres.
In livestock, hogs continue to lead the way. Demand, both domestic and export, has been up, but it was the Hogs and Pigs report that pushed the market, Rook said. Martinson said the report showed contraction in the hog herd, likely to lead to tight supplies.
The situation could last a whole year, he said, because the report shows farrowing intentions for the summer are down.
Domestic demand is expected to continue to rise for all meats. The cattle markets, however, continue to lag. They finished stronger for the week, Martinson said. "But it wasn't a convincingly strong performance."
He still anticipates demand to increase in the Second Quarter. As business picks up at restaurants and hotels and events get back on track, higher end cuts of meat should be in demand and take everything with it, he said.