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Russia is escalating tensions with Ukraine and that has wheat soaring

Amid escalation of war and ongoing tensions between Russia and Ukraine, the wheat market took off this week, Randy Martinson of Martinson Ag Risk Management told Carah Hart of Red River Farm Network on the Agweek Market Wrap.

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Amid escalation of war and ongoing tensions between Russia and Ukraine, the wheat market took off this week, Randy Martinson of Martinson Ag Risk Management told Carah Hart of Red River Farm Network on the Agweek Market Wrap.

Wheat's strength spilled over to corn, while soybeans still struggled a bit, Martinson said. It's pretty normal this time of year, as harvest starts, for corn and soybeans to struggle. But this year, supplies are tight and early yield reports have been less than hoped for.

"The early harvest of corn and soybeans are coming in lower than anticipated," Martinson said.

In southeast North Dakota, he's heard yields of 30 to 35 bushels for soybeans, and Iowa has reported some disappointing corn yields. However, Illinois is still expected to have a good harvest.

Basis levels have widened out a bit in anticipation of corn and soybean harvest, while wheat basis has improved. Once corn and soybean harvest is half or three-quarters completed, Martinson expects those levels to tighten up.

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The Federal Reserve again raised interest rates, which increased the value of the U.S. dollar. That will hurt already struggling export sales, Martinson said. Plus, Argentina is trying to unload product to make room for harvest, which isn't helping exports either. But South America's dry conditions likely will eventually lead to more U.S. business.

The interest rate hike has cattle markets on the defense, Martinson said. Plus, continued drought reduction in the Southern Plains has meant plentiful supplies of cattle on top of seasonal pressure. The Cattle on Feed report, due out later on Friday than the Agweek Market Wrap conversation, was likely to show a high placement number, indicating some calves are going straight to feedlots, Martinson said. That will add stress for the short term on the cattle market, while long term trends show a cattle herd that continues to shrink.

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

Jenny Schlecht is the editor of Agweek and Sugarbeet Grower Magazine. She lives on a farm and ranch near Medina, North Dakota, with her husband and two daughters. You can reach her at jschlecht@agweek.com or 701-595-0425.
What to read next
Speculation of escalating war between Russia and Ukraine and Russia not allowing further exports out of Ukraine at the end of the month played a roll in the markets this week, as did early harvest results.