Slowdown in inflation a welcome site in the marketplace

Conditions have been friendly to the grains and cattle continue to see high selling, according to Randy Martinson of Martinson Ag Risk Management.

A John Deere tractor pulling a blue planter goes through corn stubble.
Little tillage work is being seen throughout much of the northern plains as cold, wet conditions returned.
Michelle Mensing / Grand Vale Creative LLC

Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at

The second week of April started off on good footing with the grains posting solid gains due to weather concerns and the expectation that Monday afternoon’s Crop Progress report would be friendly. South America’s crop progress report was friendly to the grains as it confirmed slower harvest progress than expected. Argentina continues to see lower than expected yields.

Light activity was focused on position squaring ahead of Tuesday’s USDA April Crop Production report. The report was a little less of a driver than expected as traders’ attentions quickly turned to weather after the report was released. Early week forecasts had the one-to-five-day, six-to-10 day and 11-to-15-day forecasts all calling for below normal temps. Precip was not expected to be an issue, but the cold temps will certainly slow down the snow melt and delay the start of planting in the northern Plains .

Thursday’s attention turned to focus on the first of two economic indicators. The CPI (consumer price index) estimate was released Wednesday and came in close to expectations. The CPI was at 5%, 0.1% above last month but 0.1% below expectations.

Last year it was at 6%. This is friendly as it finally shows a slowdown in inflation. Thursday’s PPI (producer price index) estimate came in close to expectations, which verified a slowdown in inflation and increased the likelihood that the Federal Reserve will not increase rates in May. Quite a drastic change from seeing bank failures in March and expecting rates to increase 0.5 to 0.75% to now seeing inflation slowing and maybe no rate increase for a while.


For wheat, the fundamentals have been friendly wheat as warm dry conditions continue to be forecasted for the southern Plains, and this crop is already rated at the lowest rating in history. The northern Plains have seen a tremendous change since last week.

The snow melt is moving a lot faster than expected, but the current forecast is now calling for below normal temps. The next week will be extremely important for the northern Plains as the weather in this time frame will determine when potential planting begins. Wheat is also starting to see spread unwinding as traders are starting to take profits on their long hard wheat/short Chicago wheat trades. That spread is trading at $1.94, normally it is 20 to 40 cents.

Corn is seeing the tale of two cities, as is soybeans. Tight old crop supplies and the need to ration demand continues to help support the old crop months while forecasts for steady to higher acreage continues to pressure the new crop months. Old crop soybeans were supported by reports that there has been little interest in the soy for dollars program in Argentina. This is helping to support the soybean meal market as Argentina is the largest export of soybean meal in the world, and with their short production, they will not be able to meet commitments.

Russia continues to talk bad about the Black Sea Initiative . The last extension was only for 60 days and Russia is already talking about not renewing the program again as they are not seeing any concession come their way. Russia wants to be allowed back in the SWIFT program (system for paying for import/export products) as well as see sanctions lifted on fertilizer exports.

National Supply Company, CONAB released their latest production estimates for Brazil. Soybeans production increased from 151.42 million metric tons to 153.63 million metric tons. Brazil corn production was increased from 124.68 million metric tons to 124.88 million metric tons.

Rosario also released their production estimates for Argentina. Corn production dropped 3 million metric tons to 32 million metric tons. Soybean production dropped 4 million metric tons to 23 million metric tons. The first production estimate for Argentina soybeans was 51 million metric tons.

At this point, the combined South America 2023 soybean production is at 176.63 million metric tons. Using the above estimates, versus USDA’s latest estimate of 181 million metric tons, and versus 174.4 million metric tons last year. The combined South America 2023 corn production is at 156.88 million metric tons versus USDA’s latest estimate of 162 million metric tons and versus 165.5 million metric tons last year.

Updated crop progress numbers for South America were also released. As of April 14, Brazil’s soybean harvest was estimated at 86% complete versus 88% average. First corn crop harvest was estimated at 68% completed versus 74% average. As of April 13, Argentina’s corn harvest was estimated at 18% complete versus 25% average. The Argentina government had no estimate for soybean harvest but industry is estimating progress at 4% completed.


In the "we think we have it bad" category, Argentina reported their inflation level at 102.5% in March. This is a big reason why farmers are not selling their soybeans.

Corn appears to have dropped low enough once again to encourage buying as China was in and bought a jag of both old and new crop corn Thursday. Reports had China buying 191,000 metric tons of old crop corn and 136,000 metric tons of new crop corn.

China returned Friday buying 246,000 metric tons of old crop U.S. corn and 136,000 metric tons of new crop corn.

The presidents of Brazil and China met over the weekend and have vowed to work together and increase trade between the two countries. China has agreed to import more ag goods and help Brazil build infrastructure to move product.

But on that note, China released a three-year plan that lays out the groundwork to reduce soybean meal demand in the country drastically. China’s plan is to reduce feed protein contents from 14.5% to 13%. This plan has been tried before and failed.

Monday’s U.S. Crop Progress report added support. The report continues to show slow planting progress due to adverse weather conditions and a low crop rating for the winter wheat crop.

As of April 16, 8% of the nation’s corn was planted. This was 2% lower than expected by the trade but 3% above average. There was good progress seen last week as expected but that is expected to come to a halt due to the cold forecast. No progress has been reported in North Dakota, South Dakota, or Minnesota at this point.

Soybean planting progress was estimated at 4%, which was 2% above expectations and versus 1% average. No progress has been reported in North Dakota, South Dakota, or Minnesota at this point.


Winter wheat conditions were left unchanged this week at 27% good/excellent, 34% fair (down 2% from last week), and 39% poor/very poor (up 2% this week). This was as expected by the trade. It appears that the hard red winter wheat crop continues to see declining conditions while the soft red winter wheat and white winter wheat crops improve.

Spring wheat planting progress was estimated at 3% complete, 2% below expectations and down 4% from average. Minnesota and North Dakota are reporting no progress while South Dakota has 1% in the ground.

Cattle highs

Cattle continue to be the bright spot in the ag community. Live cattle set another round of all-time contract highs while feeder cattle traded to new contract highs. Tight supplies and packers being short bought is resulting in another sharp increase in cash, which is supporting futures.

This market is looking very toppy, and due to a correction, but it is likely any sell off will be shallow and met with a lot of bargain hunter buying.

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”

Opinion by Randy Martinson
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