South American weather and strong exports push soybeans ahead

AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management discuss a big week for soybeans and an expected slow down in trade heading into the holidays.

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After news of some "nuisance rains over recent weeks," South America is looking at some warm, dry conditions, Randy Martinson of Martinson Ag Risk Management says. That, combined with some recent export purchases, pushed soybeans ahead in the U.S. on Friday.

"We did see China come in and make some purchases," he said on this week's Agweek Market Wrap with AgweekTV's Michelle Rook. India also made some soybean oil purchases, he noted.

Soybean meal has been the big leader of the soybean sector as of late, Rook pointed out.

"That really has captured the market as of late," Martinson said. "It's the leader of the products."

Part of that is a lysine shortage that has made soy-based feed products more in demand, he said. But concerns about the status of the crop in Argentina — the top exporter of soybean meal — also has played a roll.


The cash market for corn has remained strong as demand for corn for ethanol continues. Exports also have been positive and are only behind 7% for the marketing year.

In wheat, the story continues to be the spread between the wheat categories. Milling quality wheat, like the Minneapolis market trades, remain tight, but the price can't get too far ahead of the feed quality wheat traded in the other exchanges.

Cash trade in cattle was sloppy this week, Rook said. Martinson suggested packers may be slowing down on kills heading into the holidays, and feedlots may not be looking for feeders.

"Who wants to bring in a bunch of calves when you're heading into the holiday season?" he asked.

Despite thin, "holiday mode" trading, Martinson said there was an upside in boxed beef, suggesting continued demand.

The hog market continues to struggle, and the price of pork trails beef by quite a bit in the stores, which should fuel demand.

"The demand isn't bad, but it just doesn't feel like the hog market can hold together," Martinson said.

The Hogs and Pigs Report due out next week from USDA might point to whether there are supply issues in hogs, he said.


Rook also questioned whether Martinson saw broader issues for the ag markets in the economy and geopolitical concerns. Martinson said interest rate increases are one area that concerns him. Higher interest equates to less discretionary purchases, which can include meat.

"That's the one thing I'm kind of worried about," he said.

And higher interest rates are not just a U.S. problem, so he also sees potential for less trade.

Martinson expects thin trading next week leading up to Christmas, with many traders already "taking their ball and going home for the week" on Friday, Dec. 17.

Rook also asked whether Martinson expected anything odd to happen in the last two weeks of the year. She said the end of the year always concerns her.

"You never know what's going to happen," she said.

Martinson said his main concerns are on the bean side, if South American comes back in line.

To watch previous episodes of the Agweek Market Wrap, click here.

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