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New year may bring anticipated sales to commodities market

Don Wick of Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discussed what's going on in the agriculture market around the world on the Agweek Market Wrap.

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It’s a fairly quiet week in the agriculture markets but things could be changing after the first of the year, according to Randy Martinson of Martinson Ag Risk Management on the Agweek Market Wrap.

The USDA Supply Demand report, which came out on Friday, Dec. 9, was, as expected, underwhelming and seemed to have little effect on markets.

“We weren't expecting to see a lot in this report, but it came in with even less than anticipated,” Martinson said. “It was kind of a quiet report.”

He suggests the market will likely see no change this coming week, though there is some weather in the U.S. and abroad to contend with that could bring minor change. Martinson said when looking at the hot, dry conditions in Argentina, he was very surprised that it had no effect on soybean and corn markets.

“I expected to see at least a minor tweaking of numbers,” Martinson said. He added that part of the lack of change is that Argentina is still in planting mode due to dry conditions.

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Red River Farm network host Don Wick brought up the talk of record wheat harvests in Australia coupled with wet conditions. Martinson said he’s heard that about half the crop could be feed quality and what is being harvested could be damaged.

“It’s going to be a big crop, I’m just surprised it’s not being more categorized as a sub par crop as far as quality,” Martinson said.

Russia/Ukraine war

Wick asked if exports are coming out of this war torn region of Ukraine and Russia. Martinson explained that they are still exporting commodities out of the region.

Wheat exports from Russia will be close to record highs in December, if disruptions caused by storms in its main sea route the Black Sea are limited, analysts and an association of exporters said.

“They kind of slowed down their wheat exports,” Martinson said. “They went a little more full throttle with sunflowers and sunflower oil and that kind of came in and kind of drove prices down in the U.S.”

Martinson said they should start seeing more wheat come from this region and it will be targeted toward those countries that are in need.

Producer Price Index

The Producer Price Index released on Friday, Dec. 9, showed a little higher than expected increase of .3% in November and the Fed is expected to up the interest rate by about half a percent, Wick said. He asked about concerns of entering a recession and further hits on the markets.

“It’s still upsetting the market to a degree because it is keeping money flow away,” Martinson said. He said that with the liquidation of wheat and corn, the money is leaving the markets and going somewhere else.

“There is that concern that if unemployment numbers stay low that the Fed is going to have to be more aggressive again,” Martinson said, suggesting that the interest rates could climb higher.

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Livestock reports

Wick noted dramatic livestock shifts this week. Martinson said that while this is not a high demand time for beef, they’re still seeing high slaughter numbers. He feels the supply is there to meet the current demand but he says that will change after the first of the year. He adds that with China starting to reopen, it will increase the demand, especially for pork.

This upcoming week, Martinson said he’ll be watching the weather patterns and he'll continue to watch the corn and wheat markets, but he expects things to be quiet until January.

“A lot of traders just take the money off the table and wait for the new year to start reinvesting again,” Martinson said.

(The Agweek Market Wrap is sponsored by Gateway Building Systems.)

Michael Johnson is the news editor for Agweek. He lives in the city of Verndale, Minn., but is bent on making it as country as he can until he returns once more to the farm living he enjoys. Also living the dream are his two children and wife.
You can reach Michael at mjohnson@agweek.com or 218-640-2312.
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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.