Minneapolis wheat got above $10 for the first time since 2012. So, AgweekTV's Michelle Rook asks Randy Martinson of Martinson Ag Risk Management, how did we get here and where do we go from here?
Martinson, talking to Rook on this week's Agweek Market Wrap sponsored by Gateway Building Systems, said a combination of factors have come into play, including good demand for milling quality wheat, tight supply of milling quality wheat, China having issues with planting, a forecast for dry conditions in the Southern Plains and an outlook that appears to show a likely pickup in demand.
As to where it could go from here, Martinson said that's anyone's guess. He didn't expect wheat to cross the $10 mark until spring. Next resistance levels are $10.35 and $11.20, and there isn't a lot of precedence for these kind of prices.
"We haven't been here many times, so this market has some room to move right now," Martinson said.
Kansas City also hit highs on Friday. Rook said Minneapolis is the most thinly traded of the wheat markets, with the other market in Chicago. Minneapolis does about one-third of the volume of the other cities. But Martinson said it's a quality over quantity thing right now.
"It's the quality wheat and it's where the attention is," he said.
Corn got some help this week from the strong wheat market, as well as the crude oil market. But it gets held back by the soybean market, by harvest progress and by planting going OK in the Southern Hemisphere, Martinson said. It continues to trade around $5.40, Rook said.
Corn will have to go higher to get acres with reports of high fertilizer prices, as soybeans use less fertilizer. Martinson said forecasts for heavy rains in the eastern Corn Belt, where stock integrity is an issue, could become a factor for corn, too.
Soybeans have been led for weeks by the soybean oil market, but that market struggled this week as a follower of the palm oil market. Another factor that "took the wind out of the sails" of the soybean market was no confirmation of big demand for soybeans from China, Martinson said.
Soybean meal, meanwhile, was stronger than usual, Rook pointed out. Martinson said that's a good thing and is due in part to concerns about Argentina weather.
The U.S. Department of Agriculture released a Cattle on Feed report on Friday, which was "fairly bullish on the surface," Rook said. Martinson said that should support the feeder market.
Cattle might be held back a bit by a competing protein — pork.
"The ugliest market for the week was hogs," Rook said, pointing out new contract lows in that market.
Martinson said he feels like the hog market has to be reaching close to the bottom but continues to struggle.
The Agweek Market Wrap also is available on the Agweek Podcast.