There's drought in the Northern Plains of the U.S., drought in Canada, drought in Russia and too much moisture in the European Union. And all of those factors mean there are legitimate concerns about the world supply of wheat, AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management said on this week's Agweek Market Wrap, sponsored by Gateway Building Systems.
Wheat was up big in Kansas City, with gains also in Chicago and Minneapolis.
Minneapolis did not lead, Martinson said, which is likely a function of harvest pressures. Yields have been better than expected for hard red spring wheat in some places, and supply is good right now with wheat coming in off the combines.
However, he said things could change come spring if demand issues crop up. In that case, he could see prices going up to $10 or higher.
Some of the supply issues may be spelled out in next week's World Agricultural Supply and Demand Estimates report, due out Thursday.
Corn, Rook pointed out, is pretty tied to wheat in the markets right now. As prices go up for wheat, it'll push corn back into feed rations, thus increasing demand and prices.
Another factor helping corn this week was lowered expectations for the Brazilian crop.
"Their corn crop is in tough shape," Martinson said.
Soybeans had a down week, and Martinson said it was interesting to see yield estimates go higher in soybeans. The crop, at least in the Northern Plains, seems to have been hit hard by drought conditions, even more so than corn, he said.
The price got low enough to attract trade interest and briefly traded below its 100-day moving average, though it closed the week slightly above.
Cattle had a strong week, "finally" performing better in cash trade, Rook said. Boxed beef prices were strong, imports were down into the U.S., while exports were OK, supplies are tightening and slaughter weights are decreasing, Martinson said. That's a pretty positive picture for the cattle markets.
Plus, Rook pointed out, drought liquidation now and an early run of feeder calves to salebarns likely will mean for tighter supplies in the spring than usual.
While the cattle market was strong, that didn't carry over into the hog market. Martinson speculated that there still may be some lingering concerns that African Swine Fever could show up in the U.S. Plus, October through December historically have had higher production, which may be part of it, Rook said.
"If cattle keeps going, I hope that brings the hogs with it," Martinson said.