South American weather, Mexico GMO ban and Russian retaliation impacting markets

South American weather, the planned Mexico GMO ban and Russian retaliation impacting markets were topics of the Friday, Feb. 10, Agweek Market Wrap with Don Wick of Red River Farm Network and Randy Martinson of Martinson Ag Risk Management.

The starting the conversation with a talk about the latest USDA Monthly Crop Progress report, which did not shake things up too much. One variant noted by Martinson was the reduction in soybean crush demands. That comes at a time when soybean crush plants are coming on board, with several more in the works in the upper Midwest.

“That took us by surprise,” Martinson said.

A slower demand for ethanol was not a surprise. No change seen in corn exports was a bit of a surprise. Wheat changes were minimal.

“In all, the report was friendly to the wheat, neutral to the corn and maybe a little negative to the beans,” Martinson said.

Don Wick noted that due to a hacker situation, they’ve gone two weeks now without a Commitment to Traders report . He wondered how big of a deal that was for traders. Martinson said it would be nice to see who is at work in that report as it helps traders follow the trends.

South American weather continues to be king in conversation in world agriculture.

Rain events in Brazil continue to slow harvest. Yields are better than expected in that area.

“Overall we’re seeing a little slower for the harvest, which is slowing down the planting for the corn crop,” Martinson said of northern Brazil.

Southern Brazil is on the drier side and Argentina remains in desperate need of moisture. Farmers' production there could see significant cuts without needed rains.

Durum wheat prices are holding up better than anticipated, Martinson said. That should encourage durum growers moving forward.

Wick brought up the planned Mexico ban on GMO corn imports and how there is talk of getting a solid answer from Mexico for the future. The ban was expected to go into effect in 2024. Martinson feels there will be some resolution to this situation.

“Mexico knows that they are not going to be able to get a crop cheaper or quicker than they can get U.S. corn,” Martinson said. “ I think now they are kind of realizing that and trying to backpedal a little bit.”

Wick noted that Russia has announced it will back off on oil production in March in retaliation to sanctions from the U.S. and other western countries.

Martinson said that on top of that, once China gets moving again, they’ll be demanding a huge amount of fuel.

“I think it would encourage producers to, you know, start looking at locking in your fuel needs for the year,” Martinson said.

Cattle markets remain a bit sleepy, which surprised Martinson after seeing a friendly Cattle Inventory Report.

Economic factors play into the beef buying attitudes of consumers. There’s higher interest rates and beef at a premium price in the grocery store. Meanwhile pork is losing some value. He feels that will play into the domestic beef demand moving forward.

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