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Outside forces were a big factor in the grain markets this week, Don Wick of Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discussed on this week's Agweek Market Wrap.
Under a plan released Thursday by the Environmental Protection Agency , oil refiners will be required to add 20.82 billion gallons of biofuels to their fuel in 2023, 21.87 billion gallons in 2024, and 22.68 billion gallons in 2025. The plan also includes a way for electric vehicles to generate credits.
- Next week's USDA report and South America weather expected to influence markets
- U.S. needs to build or maintain all crop acres to increase stocks
- Why are the U.S. and Canada fighting over dairy?
- Drought threatens U.S. wheat production despite acreage bump
- Cow numbers continue to drop across the U.S.
Martinson said the announcement took the "wind out of the sails" for soybean oil and corn, because it also focused on more advanced biofuels rather than just ethanol and biodiesel. However, he said soybean oil is a big part of advanced biofuels, so he thinks the trade was looking at it wrong. Canola got a boost from the Thursday announcements, he explained, because canola oil now is an approved feedstock for advanced biofuels.
In other outside forces, Congressional action to prevent a railroad strike was a "little bit of good news" that alleviated concerns about moving products, Martinson said. That was a "big sigh of relief for the grains and the meats as well," he said.
Protests in China over "egregious" lockdowns might mean the restrictions there get lightened up, Martinson said. He explained the COVID-19-related measures have been hurting the economy and consumption, which means fewer U.S. exports heading to China.
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While not a lot of new news has come out of Russia and Ukraine at the moment, both countries are trying to off-load wheat. That could hurt already struggling U.S. wheat demand, Martinson said. He said corn demand also is struggling both because of poor exports as well as ethanol issues and animal agriculture retraction.
"We always say high prices cure high prices," he said.
Dropping prices might inspire some more demand, he said.
"We're flirting with close to contract lows," he pointed out, while noting that soybeans have been holding pretty strong due to being "the only game in town" as of yet.
Wick said he's heard from a lot of producers who are concerned about drought. Martinson said that while drought in the winter isn't the worst thing, if there isn't a pattern change or moisture in the forecast by February or March, there may be major concerns for 2023 crops.
"We don't have a lot of soil moisture out there," he said.
Cattle are holding steady, with feeders posting big gains, Wick and Martinson discussed. Cash trade has been strong, with record levels in some places. Cow slaughter continues to be up, which has dampened the slaughter market somewhat. But supplies continue to tighten, and Martinson expects to "continue to see the cattle market improve as we flip the calendar to a new year."
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)
