If ProFarmer tour is right, corn supplies might be particularly tight this fall
Randy Martinson of Martinson Ag Risk Management and Don Wick of Red River Farm Network discuss the Pro Farmer tour, interest rates, weather, exports and more on the Agweek Market Wrap.
The ProFarmer tour made its way through some of the main corn states, and Randy Martinson had a one-word reaction: "Wow!"
The tour results had drastically lower estimates for corn yield and lower estimates for soybean yield in the states it went through compared to U.S. Department of Agriculture estimates. Martinson, of Martinson Ag Risk Management, told Don Wick of Red River Farm Network on the Agweek Market Wrap that the the corn result was 7 bushels per acre less than USDA estimates. The ProFarmer estimates tend to be a little off, he said, but even a smaller decline would be huge.
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"Even if it's 3 bushels, that's going to drop our production and our stocks," he said.
For soybeans, the drop wasn't as big, but added demand from the E.U. or China due to drought could make soybean stocks tight, too.
Another item this week that will impact the markets was a speech Federal Reserve Chairman Jerome Powell gave. The speech, which Wick pointed out was only about 10 minutes, was influential. Martinson said the implication was that interest rates are going to stay high, and the dollar rallied on the news and the Dow dropped. A stronger dollar may hurt exports but funds also may swing back into commodities, he said.
On the topic of exports, Wick brought up the USDA's export reporting blunder this week. The department intended to roll out a new reporting system, but they pulled the system after big discrepancies in the report on Thursday. Martinson said that was uncomfortable for traders, both because they don't know for sure what was sold but also because it lessens confidence in the USDA.
"We know that the sales numbers should have looked fairly decent," he said.
On the weather front, moisture is expected this weekend, followed by warmer and dryer conditions, Wick said. Martinson said the rain may slow down wheat harvest, but warm temperatures will be welcome if they come.
"We do need some heat," he said about northern Plains crops. "We need to get all of September."
Martinson said spring wheat harvests have been a tale of two states in North Dakota, with the west seeing strong yields and low protein but the east seeing disappointing yields, especially south of Interstate 94, and generally good quality.
Livestock had a choppy week, with hogs taking a big hit because the market had been relying so heavily on exports to China.
"Because of their COVID restrictions, their demand has dropped significantly, and their imports have kind of shown that as well," Martinson explained.
On the beef side, somewhat negative Cattle on Feed and Cold Storage reports have hurt the market a bit, and plenty of supply right now means short term pressure for cattle. However, with supplies continue to tighten, that won't last for long.
Martinson said the market will continue to watch the weather and absorb the ProFarmer results. Another item of interest milling around is the Farm Service Agency's first estimate of prevented planting acreage, which North Dakota led with about 40% of the acres.
The Agweek Market Wrap is sponsored by Gateway Building Systems.