Soybeans are the market star as export business keeps coming
Soybeans were the star for the week, with continuing cuts to South American production estimates coming from all directions. Michelle Rook and Randy Martinson discuss that and other market news on the Agweek Market Wrap.
Soybeans were the star for the week, with continuing cuts to South American production estimates coming from all directions.
Randy Martinson of Martinson Ag Risk Management told AgweekTV's Michelle Rook on the Agweek Market Wrap that it's like everyone is "trying to get to lowest number the fastest."
Soybean conditions continue to deteriorate in South America, bringing export business to the U.S. and driving up prices. China, currently celebrating its new year, was even in, an unusual move for the country that is "bullish in itself," Martinson said.
He sees soybeans going up more to keep buying more acres over corn.
Corn, Rook said, is seeing some old crop problems, with China canceling orders. Martinson said the cancellation stung the old crop market.
- U.S. corn, soybean supply outlook rises on falling domestic use
- U.S. farm incomes expected to fall in 2023, after record highs
- U.S. farmers plan to go 'heavy on corn' in 2023 despite risks
- 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
Rook asked whether China will cancel more orders from the U.S., and Rook said he believes China will be evaluating their needs. The bigger question, he said, is will China stop importing out of Ukraine. If so, China may come back to the U.S. for corn supplies.
Ethanol stocks also have been growing, with ethanol profit markets decreasing, which also is a negative for corn.
Wheat was steady, Rook said, with Chicago wheat holding near its 200-day moving average. Martinson said concerns that a winter storm had mostly missed dropping snow on most of Kansas seems to have given the wheat sector strength.
Geopolitical concerns also completely to weigh on the wheat market. Martinson said 29% of the the world's wheat comes out of the Black Sea area, including Russia and Ukraine. Military action there could move business to the U.S.
Cattle had a strong week, with prices up and decent volume. That comes on the heels of a cattle inventory report earlier this week that Martinson said showed "just what we're thinking: Supplies are tight and they're only going to get tighter."
Rook pointed out that the cattle inventory report showed the U.S. herd at seven-year lows and asked how high the market could go. Martinson said $1.50 to $1.60 wouldn't be unreasonable, but much depends on the impact of expected interest rate hikes in March and continuing demand.
The demand in the hog market also is important for beef, as both could stay stronger together. The hog market, Rook said, scored contract highs day after day. Demand has been strong there domestically and in export business. Rook said slaughter was down 270,000 from the same week last year, proving that hog supplies are tight.