'Choppy week' has some grains trading at or near record levels

There's not a lot of rationing happening in the grain market right now, with grains trading at some "pretty lofty levels" during a "choppy week," Don Wick of Red River Farm Network said.

Wick joined Randy Martinson, of Martinson Ag Risk Management, on this week's Agweek Market Wrap, sponsored by Gateway Building Systems.

"We are seeing some really hefty prices," Martinson said, noting all-time high prices for soybean oil, canola and cotton, and near all-time contract highs for corn, soybeans and wheat.

Wick noted confirmation of export sales to China played a part. Typically, Ukraine and Brazil would have a lot of business right now. But Martinson said Ukraine isn't getting much shipped out due to the invasion of its country by Russia, and Brazil's soybean crop appears to be "well off of expectations," which opens up the door for more exports from the U.S. to other countries.

Also impacting soybeans is the global vegetable oil market. Indonesia banned exports of palm oil to protect domestic supply. Martinson explained that palm oil is the largest segment of the vegetable oil market, and Indonesia is the biggest global supplier of both palm oil and vegetable oil in general. So with Indonesia out of the market and Ukraine and Russia out of the market for sunflower oil, of which they are the biggest global exporters, "all of the sudden, you've got that market squeezed pretty tight," he said. That's driving soybeans higher.

Wick said weather, too, has been a big driver in the markets, as cool, wet weather hasn't allowed much in the way of planting weather.

Martinson said the system currently moving through the region seems likely to "set the tone for ag in the northern Plains going forward." Final Risk Management Agency planting dates — meaning the last date for planting with full crop insurance coverage — for some crops are as early as May 15. The final planting date for corn in much of the region is May 25. He wouldn't be surprised to see farmers who intended to plant spring wheat, canola or corn switch to later season crops.

The U.S. dollar also has gained in value, but so far, Martinson said that's not impacting the market much for any crop but wheat. In wheat, India is exporting aggressively. But other crops still are finding global business, meaning it hasn't hurt them "yet," he said.

Another thing to watch in the markets, Wick said, is the CME announcement that daily trading limits for corn and soybeans have increased. Corn's limit now will be 50 cents, while soybean's will be $1.35. Martinson expects that could deter some producers from using futures markets to do some hedging and may change some contracting options at elevators.

Live cattle were up this week, but Wick pointed out that packers were bidding for cattle two to three weeks out. Martinson said that's likely an indication of packers trying to get cattle booked out further.

Wick also brought up the cost of production on cattle right now, with the grains sky high.

"That feed bill is going to be pretty high," he said.

Martinson said that the feeder cattle market has dropped off some, while fat cattle have hung in there. The spread between the two makes up the profit for cattle feeders. However, he said the spread may not be enough right now to "reward the feeder taking the risk."

For market news throughout the week, tune into the Red River Farm Network .