The first full week of December was mostly quiet, with even the December World Agricultural Supply and Demand Estimates report causing little movement outside of the global wheat market.
AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management talked about the "December doldrums" and holiday-style trading the markets seem to have entered already on this week's Agweek Market Wrap, sponsored by Gateway Building Systems.
The WASDE, Rook said, was quite benign other than in terms of global wheat stocks. The U.S. had a not-unforeseen increase of 15 million bushels of wheat, but other countries had bigger increases, leading to a major shift in the world wheat picture. The increase almost entirely was from feed-quality wheat, so Rook wondered if the rally is over for winter wheat in the U.S.
"I think it is," Martinson said. "It's going to be hard to get it back up there again."
Milling quality wheat, as in what's traded on the Minneapolis market, is still harder to find. Minneapolis wheat, Martinson said, is separating itself. But it's hard to get the prices from winter wheat to spring wheat very far apart, he explained.
Corn and soybean stocks were left unchanged in the WASDE. That was disappointing for corn and a good thing for soybeans.
For corn, many analysts expected an increase in demand from things like ethanol and exports. On the export front, the past week has been the sixth largest on record for U.S. corn and included the largest ever sale to Mexico.
"It was interesting to watch the corn market hardly react to that, Randy," Rook said regarding the sale to Mexico.
"It was really tough to see how almost a 1.8 million metric ton sale in the corn was changed by a penny," Martinson said.
For the time being, Martinson expects cash prices and basis prices will be strong. Where corn is needed, basis will help get farmers to sell.
In soybeans, the lack of change in stocks was positive because many analysts had expected a drop in exports. However, the soybeans had other bad news, including not-so-rosy numbers on renewable fuel obligations from the Environmental Protection Agency. That pushed soybean oil down, but soybean meal remained strong.
Rook and Martinson don't expect any major fireworks in the markets until at least after the holidays. Martinson said South American weather will be the big factor for the moment.
It was a disappointing week for the cash market in cattle, Rook said, though futures already had been trading at a discount to cash. Martinson said the cattle market "just went dark," and feedlots aren't looking to bring in more cattle at the moment. He's still friendly cattle long term, as he expects tighter numbers to continue to reveal themselves after the first of the year. Demand isn't expected to be stellar in December, as beef isn't the holiday protein of choice for many people.
"Beef isn't the feature now," he said.
The hog market remains range bound, Martinson said, bouncing largely between pre-established highs and lows. It'll need some help to get out of the range, like a big change in the Hogs and Pigs Report due out later this month. Domestic demand should remain strong with renewed COVID fears starting to wane.
"I think this market is just kind of setting itself up like in a real holiday mode, a lot sooner than normal," Martinson said.