Bank failures, Black Sea deals and interest rates all clash with the market

Bank failures, Black Sea shipping deals, and potential hikes to the interest rate seem to be causing the most market changes for the week, according to Randy Martinson of Martinson Ag Risk Management. He shared that during the Agweek Market Wrap on Friday, March 17, with Randy Koenen of the Red River Farm Network.

While markets took a hit during the week they finished on the plus side.

“Overall we’re going to end the week on the plus side, but it could have been a little better performance than the way things looked at first,” Martinson said.

The looming question, which seems to be more likely than not, is whether the Federal Reserve will increase the interest rate next week.

“It’s likely they will, but by how much,” Martinson wondered.

Koenen expressed that the Federal Reserve will do what they want regardless of bank failures.

Martinson agreed, saying that it’s the Federal Reserve’s job to reduce inflation, not protect Wall Street.

Interest rate hikes tend to have less impact on the grains and more on commodities like beef. When disposable income takes a hit, consumers slow their eating out and consuming of certain areas of the market, Martinson explained. Look for decisions on interest rates next week to cause a stir with cattle markets.

Corn market levels brought a great response from China who came in and bought nearly 90 million metric tons.

“It shows that now they are ready to start taking delivery of it, so it’s going to start moving into the export channels,” Martinson said. He believes they’ll also be encouraged to buy U.S. beans as South American beans have taken a hit to the weather.

Speaking of South American weather, Martinson said no matter what production estimates show, they still expect record crops, which will need to find a home.

While Brazil continues to fight with rain, Argentina continues to see crops hit by hot, dry weather.

“Right now you gotta wonder if they’re (Argentina farmers) going to have anything to combine,” Martinson said.

Even with the big Brazil crop, Martinson feels that the U.S. will need to buy some soybean acres to make up for the expected losses in Argentina. The U.S. could see a boost in soybean exports from this weather situation.

Russia remains in the spotlight as, on Friday, with Saturday being the deadline, a Black Sea grain deal had not been agreed upon. Russia wants to extend the deal 60 days, while other countries want the 120 day extension.

While it’s nice to focus on weather in other countries, Koenen brought up that winter weather in the northern Plains is firmly planted.

“We’re expected to keep winter weather until the end of March, the first two weeks of April are still expected to see below normal temperatures,” Martinson said. “I mean right now corn and wheat look like those acres could be drifting off to some later season crops at this point.”

Martinson said what the weather forecast says on April 1 will be a tell-tale sign of the future.

(The Agweek Market Wrap is sponsored by Gateway Building Systems.)