The April World Agricultural Supply and Demand Estimates report came out on Friday, with positive news for the corn and wheat markets and a bit of a bearish turn for the soybean market.
Corn ending stocks were down 150 million bushels to 1.35 billion bushels, AgweekTV's Michelle Rook said on this week's Agweek Market Wrap, sponsored by Gateway Building Systems. But is that enough to satisfy traders?
"We're probably not quite there yet," Randy Martinson of Martinson Ag Risk Management said.
The report indicated an increase in U.S. corn exports, but trade was looking for a bigger increase, he said. Demand needs to continue to build.
Martinson said the status of the second-crop corn, also known as the safrinha, in Brazil will be interesting going forward. The U.S. Department of Agriculture did not anticipate any problems with the crop in the WASDE report, but farmers there just finished planting and hot, dry conditions are expected to continue.
"We'll see if that does any damage to the corn or not," he said.
Wheat also saw some positive news out of the WASDE, as world ending stocks dropped 5.7 million metric tons. Much of that is attributed to China replacing corn with wheat in livestock feed rations to cheapen things up.
"China to the rescue for wheat," Martinson said.
Meanwhile, drought conditions in the eastern Dakotas also is playing into the market. While parts of the eastern Dakotas into Minnesota received rain, extreme drought continues in the west. And Martinson said there are rumors of "producers parking equipment and not planting because it's too dry." He explained it's so dry that farmers are having trouble establishing a seed bed. Some may take prevented planting insurance due to dry conditions — a more unusual condition than taking prevented planting for wet conditions.
"It's a higher hurdle to try to cross," he said.
And he thinks the market needs to move higher to encourage planting.
"I think we need to see a seven in front of wheat to encourage people to continue planting," he said.
The WASDE left soybean ending stocks unchanged, which wasn't a surprise with slowed down demand and shipments. Plus, if people go away from planting corn or wheat, they may end up planting more soybeans, upping the acreage. Plus, Brazilian soybean production increased a bit, giving a little more breathing room to concerns about tight supplies.
In livestock, cattle are finally pushing higher, as has been expected for some time.
"It's a strong market, and we've been waiting for this," Martinson said.
That's being fuel by big increases in demand as barbecue season has started and the economy has improved. Tight supplies are expected to continue, which will keep the market strong, Martinson said.
Rook pointed out that live cattle put their June low in a year ago this week, which shows how far the market has come since the pandemic-fueled collapse.
And the hog market continued to build strength, with no indication of a slowdown. Martinson said restaurants opening could flood demand for pork.
"It could be a pretty interesting summer for the hog industry," he said.