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There was no shortage of headlines to pick from that impacted the markets this week, said Randy Martinson of Martinson Ag Risk Management and Don Wick of the Red River Farm on the Agweek Market Wrap.
Markets played off new supply and demand numbers from the USDA, the Russia-Ukraine war and low Mississippi River levels this week.
Martinson said the latest USDA report, the World Agricultural Supply and Demand Estimates and Crop Production, showed a drop in production numbers for both corn and soybeans. He said it provided a little better handle on where the supply is at, but not quite the full picture yet.
“The soybean number surprised everybody, and that sent the soybean sharply higher,” said Martinson.
Demand reductions caused a little bit more of a negative number for wheat and corn – both facing supply issues, said Martinson. Overall, the report painted a clearer picture for production.
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“Right now we do have a little better idea on production, but I think demand is filled with wildcards,” said Martinson.
Russia-Ukraine war
Earlier this week, explosions went off in the Ukrainian capital Kyiv, with Russia threatening to further missile attacks. The intensifying conflict was a “big driver” in the wheat market this week, said Wick, as it calls into question the future of a Ukraine grain-export deal that’s set to expire next month.
Martinson said recent activity in the Russia-Ukraine war impacted the corn market, as well.
“There's been a lot of fighting, and a lot of missiles being launched back and forth,” said Martinson. “It's going to be interesting going forward just where that comes in.”
He said it’s sounding more likely that the corridor is going to be shut down, and exports won’t be let out. Martinson said while the crops being produced need to be dealt with, he expects Ukrainian farmers to slow down production because of the escalation.
Wick said fears are at an all-time high over the Russia-Ukraine war spiking global food insecurity. Martinson agreed the conflict could lead to future implications all over the world.
“You still have a production problem in Australia, you have a production problem in Argentina, and we have a production problem in Brazil now, with too much rain,” said Martinson.
With those three major exporters having issues, Martinson said the U.S. could get to be part of the equation.
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Barges grounded on Mississippi River
Meanwhile in the U.S., low water levels of the Mississippi River have reached the point where it's too low for some barges to float, and more dredging could be needed if barges continue to run aground, said Wick.
Martinson called the idle barges and backlogs on the Mississippi a “huge headache”, and something to really be concerned about considering the time of year.
“That’s where a lot of the corn and a lot of wheat goes through those regions,” he said.
The issue of halted barge traffic on the Mississippi River will result in more loads going by truck, said Martinson, which is slower.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)
