Editor's note: Catch Randy Martinson and AgweekTV's Michelle Rook every Friday after markets close on the Agweek Market Wrap at agweek.com.

The grain markets have done something no one expected, yet again. After the U.S. Department of Agriculture released their mostly negative October Crop Production and World Agricultural Supply and Demand Estimate report, the grains have done nothing but rally. There is a saying in the markets that states when bearish (or bullish) news fails to pressure (or support) the market, maybe it's time for the trend to change. To add to that, seasonally soybeans put in a harvest low around the second week of October. Strong export sales have also helped the rally.

Last Wednesday, Oct. 13, an unknown destination was in and bought 162,000 metric tons of corn and 198,000 metric tons of soybeans while China bought 330,000 metric tons of soybeans. Last Thursday, Oct. 14, there was a report of 132,000 metric tons of soybeans being sold to an unknown destination. To wrap up the week, last Friday, Oct. 15, unknown destinations bought a total of 723,000 metric tons of soybeans and China reportedly bought another 132,000 metric tons of soybeans.

To add to the push in the grains, Paris milling wheat continues to trade to new contract highs as does Malaysian palm oil. Palm oil traded above 5,000 Malaysian ringgit/ton for the first time in history.

So, the big question: Is this just a dead cat bounce, a technical recovery, or a return to test old contract highs? For what we know as of today, and from how the market is behaving, this is more than a dead cat bounce but less than a return to old highs. This is likely just a technical recovery, which is getting added support from demand and South American production concerns.

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The third week of October had the appearance of a risk on week as most of the commodities are higher, except for the U.S. dollar, which was 0.400 cents lower. Talk of inflation is helping to support the energy sector which in turn is spilling over to help give the grains support. OPEC+ seems to be saying one thing but doing something else. The organization keeps discussing production increases, but so far, their increases have been less than expected.

The Oct. 17 Crop Progress report added support as both corn and soybean harvested pace were below expectations, as was the estimate for winter wheat seeding. As of Oct. 17, corn’s harvest progress was estimated at 52% complete versus 41% average, 2% less than expected by the trade. Soybean harvest was estimated at 60% complete versus 55% average and also 2% less than expected by the trade.

Corn’s last crop condition rating came in as expected at 60% good/excellent, unchanged from last week. The last rating has North Dakota’s crop at 15% good/excellent, Minnesota’s crop at 37% good/excellent, and South Dakota’s crop at 21% good/excellent.

Sugarbeet harvest also continues to lag behind average with harvest progress estimated at 40% complete versus 61% average. Minnesota is estimated to be 31% behind average pace and North Dakota is 43% behind. Most of the delay is due to the unseasonably high temps.

Sunflower harvest is moving forward though, with 29% of the nation’s sunflowers in the bin as of Oct. 17, versus 21% average.

Winter wheat seeding also came in below expectations. Planting progress was estimated at 70% complete versus 71% average and 3% lower than expected. Emergence is also running behind average as only 44% of the crop has emerged versus 47% average. Next week we will get the first crop condition rating of the season for winter wheat.

Pasture and range condition improved slightly last week. Conditions improved 1% to 25% good/excellent, but North Dakota saw its pastures drop 3% to 4% good while Minnesota improved 6% to 24% good/excellent and South Dakota improved 1% to 3% good.

Topsoil moisture conditions improved last week, increasing 5% to 63% surplus to adequate. Subsoil moisture conditions also improved, but only 3% to 55% surplus to adequate.

The Crop Progress report is starting to lose its influence on the market as the U.S. 2021 growing season comes to a close. This will soon be said about the U.S. weather as well, as now most of the attention in the U.S. will focus on demand while weather and growing concerns will shift to South America. So far weather has been favorable in Brazil as recent rains are allowing for planting progress to advance. But long-term forecasts are showing a drier pattern. Argentina is already seeing the drier pattern which is starting to cause concern.

Basis levels continue to remain very strong. It still seems odd that corn and soybean basis levels could remain at record tight levels with an advancing harvest that is reporting better than expected yields. Basis is a function of local supply and demand. Supply is increasing due to harvest reaching 50% complete as traditionally the last half of harvest comes to town. This could result in a short-term drop in basis level, but it is unlikely basis will stay low as once harvest is wrapped up, producers are likely going to weld the bin door shut and wait for spring to move grain.

The recent rally has the market looking a little toppy and maybe ready for a slight retracement. After all, the grains have closed with solid gains the past five sessions (since the release of the October Crop Production report).

There are rumors that China is in buying soybeans and possibly corn. Wheat and corn prices in China have converged and are running close to equal. That has resulted in China switching their feed needs back to corn. This will slow down wheat demand, but it should result in an increase in corn export demand. Wheat continues to see support from extremely tight supplies of milling quality wheat in the world. This will help keep spring wheat higher throughout the winter months as the market needs to ration supply.

Informa released their acreage estimates for 2022. Their estimates seem a little more about not wanting to rock the markets than reality. Their corn acreage estimate came in at 92.4 million, 1 million less than 2021, soybean acreage at 87.4 million, 200,000 acres more than 2021, and wheat acreage at 48.8 million, 2.1 million above last year. Winter wheat acreage is estimated at 34.2 million, 600,00 above 2021. Other spring wheat acreage is estimated at 12.7 million, 1.3 million above 2021. It does not appear that they think fertilizer costs will influence decisions.

At this point, producers should not be excited to sell spring wheat, but could entertain selling corn and soybeans as both markets have rallied nicely after the negative Crop Production report.

Cattle put in a strong performance the first week of October but have since fallen silent. Economic concerns continue to keep a lid on cattle’s performance. The biggest issue is expectations of less discretionary spending, as when inflation sets in, consumers will have less money to afford the higher priced beef. The lack of movement in the cash market is adding to the pressure as it seems cash cannot get above $124.

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