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Soybeans take the lead in solid week for the markets

On this week's Agweek Market Wrap, AgweekTV's Michelle Rook said just about everything was up except feeder cattle, but soybeans were the clear leader.

Soybeans were the big winners in the market this week, with new contract highs and all sorts of demand for U.S. beans.

On this week's Agweek Market Wrap, AgweekTV's Michelle Rook said just about everything was up except feeder cattle, but soybeans were the clear leader.

A lot of that came through South American weather premium, she said. Randy Martinson of Martinson Ag Risk Management agree.

Analysts continue to lower expectations for South American soybean crops, with northern regions expected to lose about 10% of yield while center and south regions might have a "disaster," he said.

In part because of those crop expectations, demand for U.S. soybeans has been strong. Rook and Martinson mentioned sales to Mexico, China and unknown locations, which Martinson said very well might be China. Those sales, he said, are an indication that buyers don't think Brazil is going to have the beans to fill needs to last the summer.

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The next couple weeks might be sloppy while China celebrates its new year, but there is plenty of strength still to be had in the soybean market. Rook pointed out that soybean oil hit new contract highs and competitors including vegetable oil, crude oil and palm oil also are high.

"The world vegetable oil market continues to be tight," Martinson said.

In the wheat market, tensions have eased a little between Ukraine and Russia, but those issues aren't completely resolved, Martinson said. But the other issue in the wheat market has been concerns about the weather in the winter wheat producing areas.

However, Martinson doesn't think drought right now will say much about the ultimate condition on the crop.

"Winter conditions aren't indicative of what the crop does when it comes out of dormancy," he said.

Spring wheat has struggled of late, with Rook noting lower prices in the Minneapolis market.

"Spring wheat needs to try to pretend that it wants to buy acres or at least hold onto acres," Martinson said.

Corn was stuck between soaring soybeans and middling wheat, but it ended up having a good week. Martinson said there hasn't been much demand but rumors that Canada might be in need of supply could help the market. The problem will be getting supply there with trucking and rail issues.

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The market also contains some weather premium due to issues in South America. Martinson said planting on the safrina corn crop in Argentina has been slow, and if hot, dry weather comes back it could impact pollination.

In livestock, cattle were down a little though there was steady cash trade. Rook asked whether the cattle inventory report due out on Monday might move the market. Martinson thinks it could, with expectations of stagnation or even retraction in the U.S. cattle herd.

"We know that we haven't been seeing herd expansion," he said.

Plus, expected winter weather over much of the country should slow cattle development which also will be positive for the market.

The feeder market also had to contend with the higher corn market, Rook said.

Hogs continue to be strong on tight supplies, strong demand and very strong exports. Martinson thinks those factors bode well for hogs, and he thinks cattle will be strong going forward, too.

"The pork and the beef will continue to see some pretty good strength," he said.

Rook said pork exports have been "stellar," and part of that likely is China stocking up before its new year and the Olympics.

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