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Hot markets cool off with export news, forecasts and profit taking

The markets — and the wheat markets in particular — started off on fire this week, said Don Wick of the Red River Farm Network. But as he and Randy Martinson of Martinson Ag Risk Management discussed on this week's Agweek Market Wrap, sponsored by Gateway Building Systems, most of the gains were lost by the end of the week.

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The markets — and the wheat markets in particular — started off on fire this week, said Don Wick of the Red River Farm Network. But as he and Randy Martinson of Martinson Ag Risk Management discussed on this week's Agweek Market Wrap, sponsored by Gateway Building Systems, most of the gains were lost by the end of the week.

Wheat had climbed to new heights on a variety of news, including the Wheat Quality Council's findings of a subpar winter wheat crop in Kansas, news of a possible ban on wheat exports in India and continuing planting issues in the northern Plains. But Martinson said some of those concerns were lessened as the week progressed, including that India's ban likely won't be as tight as assumed earlier in the week.

Beyond that, he said the wheat market had just become "extremely overbought," which led to profit taking and fund liquidation "to clean up a market."

Volatility based on global food security likely will continue, Martinson said.

Parts of the northern Plains, and North Dakota especially, remain "saturated," Wick pointed out. "How big of a play is that in the whole grand scheme of things?" he asked.

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"In wheat, it's huge," Martinson said. World wheat production remains tight, and spring wheat planting in the U.S. and Canada remains at a near-standstill.

But in terms of corn and soybeans, progress is getting made in the Corn Belt. That has relaxed the pressure on soybeans some, as it appears more acres will stay in corn or wheat that assumed.

As market volatility continues, Wick asked whether money was moving to the equities rather than "playing in the game of ag commodities." But Martinson said neither is attractive at the moment.

"They're putting it in the mattress for the short term," he said.

Cattle were down a bit, but Martinson still thinks that market will come back because of tight supplies coming soon and good export demand. Domestic demand is lagging somewhat because of gas prices, and this time of year — barbecue season — domestic demand is important.

"I'm friendly cattle," he said. "I think it'll come. But we're going to have to see the stock market stabilize."

Hogs showed some strength this week after having been beat up since the hogs and pigs report came out in late March. Martinson said tight supplies are starting to become more evident.

For the week ahead, Martinson said the Monday Crop Progress report and the weather forecast will be the most important things to watch.

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"Let's hope Mother Nature cooperates," Wick said. "We need to get that crop in the ground."

Martinson agreed. Canola's last planting date for full crop insurance coverage in western North Dakota already passed on May 15, and the last date for corn in most of North Dakota is May 25. Some farmers are going to have to decide whether to plant late, switch crops or take prevented planting insurance, he said.

The Agweek Market Wrap is sponsored by Gateway Building Systems.

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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