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As planting delays continue, corn and wheat are likely to struggle to gain acres

Don Wick of the Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discuss what late planting in the northern Plains and Corn Belt could mean for corn, wheat and soybean markets, as well as what the Fed is doing on inflation, what inflation means for markets, how world events are impacting the markets and what to watch for in the coming week.

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Planting has been way off pace not just in the northern Plains but also into the Corn Belt. While the Corn Belt's forecast appears likely to improve, parts of the northern Plains could be in for more moisture over the weekend and into next week. On this week's Agweek Market Wrap, Don Wick of the Red River Farm Network asked Randy Martinson of Martinson Ag Risk Management what that might mean for crop acreage.

In the Corn Belt, Martinson said it's going to be tough to see an increase in corn acres, though that might change if enough planting progress gets made in that region. But farther north, it looks like both spring wheat and corn will struggle to gain acres and could start losing some.

"At this point, I think we'll lose more corn and more spring wheat acres up here in the northern Plains and the western Corn Belt, just because its going to delay planting out so much the producers won't take the risk of the potential for lower yields and the fact that we're getting close to the final plant date on some of those markets as well," Martinson said.

High commodity prices, particularly for corn, might push farmers to plant past the last planting date (which varies across the region), Martinson said. But he said a lot also will depend on whether the rain stops and a warm up starts.

Wick said the Federal Reserve bumped interest rates a half percentage point and signaled similar rules will be coming in June and July. Martinson said that's friendly news for the grain markets. In the long run, it could keep strengthening the dollar, which typically can hurt exports. However, with production problems in Brazil, Martinson doesn't see that happening right now.

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"I think that will overshadow the the increase in the dollar," he said. "The trouble with it is it's going to hurt the meats more than it's going to hurt the grains."

Beef, he said, is at risk of losing out to other proteins, because disposable income is shrinking for the average consumer.

"Seventy percent or more of our red meat gets consumed in restaurants," Martinson said. "You get higher gas prices and higher interest rates, people will have a tendency to go out and eat less."

Wick also talked about how news out of Indian has been impacting the wheat market. Martinson explained that India typically only exports about a million metric tons of wheat per year, making them "a player but ... not a big player." But they had been expected to have a huge crop, which could have filled some of the gap left by slowed exports from Ukraine and Russia.

"Well, now all of a sudden March got to be the hottest on record in India, and that's trimming their production. So they were expecting to export about 10 million metric tons of wheat; now it's dropped down to between 5 and 8 million. So they're becoming less of a player," he said.

The news that their crop won't be as large could bring business to the U.S. The problem for the U.S. is that much of the southern Plains remains dry. Martinson said Oklahoma could be lucky to have half a crop compared to last year, and there are reports of a crop failure "almost from Dodge City west" in Kansas.

Wick and Martinson also discussed some "outside influences" that could have market implications into the long term, including the situation in Ukraine, Europe trying to wean themselves off Russian oil, and COVID-related shutdowns in China. Martinson said the lockdown in China is a big concern, and he's heard reports it could last until July. That could have far-ranging effects on the demand of many products.

"Their consumption of food has dropped, because now they can't even go out to buy food — it gets delivered — so that has changed the diet quite a bit for the average person in China," he said.

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The U.S. Department of Agriculture will release the May World Agricultural Supply and Demand Estimates on Thursday, May 12. Martinson said the focus will be on what USDA does with export numbers; he expects exports for wheat could be lowered, corn will remain unchanged and soybeans will be increased. On the new crop side, he said everyone is watching for what USDA will do with yield expectations given the late planting. What USDA does with expectations out of Ukraine and Russia also will be a big deal.

Heading into the new marketing week, Martinson said the weather on the northern Plains will be a big factor.

"If we get the high end of the rains up here in the northern Plains and we slow down planting more, that's going to be a big push for the wheat and the corn markets. It's going to be a drag on the soybeans," he said. "And then look at that report, what USDA's got for estimates, because that's going to be like you said, the first baseline look at 2022."

Jenny Schlecht is the editor of Agweek and Sugarbeet Grower Magazine. She lives on a farm and ranch near Medina, North Dakota, with her husband and two daughters. You can reach her at jschlecht@agweek.com or 701-595-0425.
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