Markets keep an eye on Argentina, Black Sea deal and weather at home
Randy Koenen of Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discuss what's going on in the agriculture market around the world on the Agweek Market Wrap.
The markets need to bounce back, according to Randy Martinson of Martinson Ag Risk Management as he spoke with Randy Koenen of the Red River Farm Network during the Friday, March 10, Agweek Market Wrap.
Fresh off the USDA’s World Agricultural Supply and Demand Estimates and comments from the Federal Reserve Chairman about expected interest rate hikes, markets struggled this week.
Koenen said the market responded strangely to the report. Martinson outlined that wheat exports were unchanged; corn export estimates were lowered and soybeans saw friendly reports.
Top of mind is the reduction in production coming out of Argentina.
“That crop is looking in tough shape, as far as Argentina is concerned,” Martinson said. Koenen commented that it was looking like Brazil’s numbers would make up for the
losses in Argentina
, but not anymore.
Martinson said it’s projected the combined soybean production will be just 5 million more metric tons than last year, down from an estimated 25 million metric tons, and corn looks like it could be lower than last year.
“Boy it could have been a lot bigger,” Koenen said.
With the Black Sea Grain Initiative expiring this month, not much seems to be happening. Martinson said Russia has been pretty quiet about the deal, while Turkey is ready to get it approved.
Koenen asked if this issue would cause some volatility to markets. Martinson said that was likely.
“I think if we don’t see that trade agreement advanced or renewed, I think we could see these markets turn sharply higher because of it,” Martinson said.
Meanwhile Kansas came out with wheat crop reports and they are in tough shape. The crop deteriorated another 2% from last week.
“We are hearing reports of guys already getting insurance claims and looking at going for their second crop,” Martinson said.
The lean hog market was the bright spot in the cattle market. An increase in that market is a much needed response after hog prices have taken a beating.
It appeared cattle were seeing ill effects of the Federal Reserve comments about an expected half-percent interest rate hike.
Overall, Martinson said the market is in need of correction.
“I think we’ll see this market get back up again and will encourage some more selling,” Martinson said. He believes towards the end of March, markets will gain some support by getting a better look at acreage numbers.
Some of that is going to depend on what spring weather looks like. Koenen wondered what the return of El Niño would look like for production.
Martinson said that change in weather patterns brings potential for more production. The focus now is just when winter will end and farmers can get back to the fields.
“That’s going to be the big question, it’s not a matter of if we are going to be late, it’s how late we will be,” Martinson said.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)