The search for market direction continues

Weather, Russia and Ukraine, USDA reports and more are impacting the markets, but the search continues for real direction, Randy Martinson of Martinson Ag Risk Management writes.

Wheat numbers in the November WASDE were negative to the wheat markets, Randy Martinson says.
Katie Pinke / Agweek file photo
We are part of The Trust Project.

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

What a week! The grains started off the first week of November pushing sharply higher with strength coming from news that Russia had abruptly pulled out of the Black Sea Initiative. The reason for the pull out was due to reports of an attack on the Russian Naval Fleet stationed in the Black Sea. The news of the abrupt end of the safe export corridor resulted in wheat and corn rallying sharply higher on the expectations that the U.S. could see an increase in exports.

Gains continued Nov. 1 with corn testing the $7 level while soybeans pushed above their $14 resistance. Corn was not able to hold above the $7 level while soybeans were able to extend session gains and push well above $14, making a run for their next level of resistance level of $14.95.

But as fast as Russia left the initiative, they reversed their decision saying that they only had suspended the agreement until an investigation could be completed on the attack on the naval fleet. After receiving concessions and a commitment that no military action will be taken on any boats in the Black Sea, Russia rejoined the agreement.

The Black Sea initiative is still expected to expire on November 19, unless all parties (United Nations, Turkey, Ukraine, and Russia) agree to extend the agreement. Russia has come forward and said that they will only be interested in extending the program if some sanctions are lifted. Russia would like sanctions relaxed so that Russia could export grains and fertilizer as well as lifting sanctions on their banking system.


Even with all that flip flopping, the grains wrapped up the first week of November posting gains. Soybeans were the best performer as China, Mexico, and an unknown destination returned to aggressively buy U.S. soybeans.

Other news affecting the grains is weather. It should be very concerning that both Argentina and the U.S. have seen weather forecasts calling for heavy soaking rains for most of Argentina and the U.S. southern Plains only to see both forecasts have rain amounts reduced or pulled completely.

Brazil also saw an uprising due to the recent election. Road blockages slowed movement of grain. It is more of a headline grabber as there is not much grain movement this time of year as they are planting the crop. But what is more important to the U.S. is who wins the election. With Lula in charge, it is likely ag will take a back seat and the rapid land expansion will come to an end. This will stabilize Brazil’s production estimates for the next three to four years.

The Federal Reserve hiked interest rates 0.75% on Nov. 2, which was expected by the trade. The trade was also very interested in Powell speech after the meeting to see if there would be hints as to the potential actions of the Fed going forward. Interesting enough, Powell hinted to smaller rate increases. This was friendly and reassuring to the stock market and the U.S. economy.

Markets do not like uncertainty and the second week of November has brought a lot of uncertainty to the marketplace with the midterm elections on Tuesday, Nov. 8, and USDA’s Crop Production report on Wednesday.

The week started off with two other reports, the preliminary Baseline Projections from USDA, and the Weekly Crop Progress report. Early Monday morning USDA released their 10-year baseline projections. There is little stock put into the numbers beyond 2024, as for the more part, USDA makes little adjustments to the estimates that far out. But the trade does pay attention to the estimates for the following year, in this case 2023 estimates. What was interesting in a quick look at their projections, corn acreage will increase 3.4 million acres to 92 million, soybeans acreage will drop 500,000 acres to 87 million, and wheat acreage will increase by 1.8 million acres. Total planted acreage for the big eight crops will increase 1.3 million to 250.8 million. There is doubt that those acreage will be reality, especially if the drought persists.

USDA’s Weekly Crop Progress report is getting very thin as we approach the end of the 2022 crop year. Corn harvest was estimated at 87% completed, up 11% from the previous week and 11% ahead of average. Who would have expected North Dakota to have 91% of their corn in the bin by now when a majority of the corn was planted after May 25? The average for the state is 59% at this time.

Soybean harvest is estimated at 94% complete, up 8% from the previous week and 8% ahead of the average pace. Sorghum harvest is estimated at 87% complete, up 10% from the previous week, but 12% behind average. Sunflower harvest is estimated at 81% complete, up 21% from the previous week and 20% ahead of average.


Winter wheat planting progress is estimated at 92% complete, up 5% from the previous week and 2% ahead of average. Emergence is at 73% versus 62% last week and 74% average. Wheat’s crop condition rating improved 2% to 30% good to excellent. The major states saw a weekly change of Colorado -6%, Illinois -1%, Kansas +2%, Montana -8%, Oklahoma +3%, and Texas +10%.

USDA’s November Crop Production report was slightly disappointing as it did not live up to its billing. The report came in neutral. Instead of seeing major cuts in demand, USDA made small adjustments in the numbers as they kick the can down the road.

USDA made only minor adjustments to both the old crop and new crop wheat numbers. For the old crop 2021 estimate USDA decreased seed demand 2 million bushels and increased feed demand 2 million bushels. No other changes were made in old crop wheat.

For the new crop 2022, all USDA did was increase feed demand 7 million bushels and lower seed demand 2 million bushels. The net result was a 5 million bushel decline in wheat’s ending stocks, putting stocks at 571 million bushels, which was 5 million bushels below expectations. This made the report neutral to slightly friendly.

On the world stage, USDA put ending stocks at 267.8 million metric tons, an increase of 300,000 metric tons from October and 1.2 million metric tons above expectations. Australia’s production estimate was increased 1.5 million metric tons while Argentina’s production estimate declined 1 million metric tons. The EU production estimate also declined, dropping 500,000 metric tons. No changes were made to Russia or Ukraine’s estimates. World numbers were neutral to slightly negative wheat.

USDA made similar adjustments to corn. For the old crop 2021 estimate, USDA only made minor changes between categories, increasing feed demand 2 million bushels while decreasing ethanol demand 2 million bushels.

In a surprising move, USDA increased corn production 35 million bushels to 13.93 billion bushels, 34 million bushels above expectations. The increase in production was due to another surprise, an increase of 0.4 bushels in corn’s yield. To counter the increase in production, USDA increased feed demand 25 million bushels. There were no adjustments made to corn’s export estimate. This resulted in a 10 million bushel increase in ending stocks, putting stocks at 1.18 billion bushels, 33 million bushels below expectations. The U.S. numbers from the report were friendly corn.

The world numbers were also friendly corn as USDA made little adjustments. World corn stocks were estimated at 300.8 million metric tons, 400,000 metric tons above last month but as expected by the trade. Brazil and Argentina’s numbers were left unchanged.


For old crop soybeans, USDA made no adjustments. But like corn, USDA surprisingly adjusted new crop production by increasing yield. Soybean production was increased 33 million bushels to 4.346 billion bushels, which was 19 million bushels above expectations. The increase was due to an increase of 0.4 bushels in the yield, now estimated at 50.2 bushels/acre (0.2 bushels above expectations). On the demand side, USDA increased crush 10 million bushels and residual 2 million bushels. The net result was a 20 million bushels increase in ending stocks, now estimated at 220 million bushels, which was 1 million bushels below expectations. The report was neutral to friendly U.S. numbers.

The world numbers were a bit deceiving. World stocks were estimated at 102.2 million metric tons, 1.7 million metric tons above last month and 1.3 million metric tons above expectations. That would be considered negative to the market, until you dig in the numbers and see that the increase was not due to any adjustment in production or decrease in demand. It was due to an adjustment in beginning stocks after adjustments were made to old crop numbers. Argentina’s production was decreased 1.5 million metric tons due to the drought.

In other news, Mexico is starting to set the stage and planning on how they are going to halt all imports of GMO corn by 2024. This could impact the U.S. corn market drastically as Mexico imports 600 million bushels of U.S. corn annually.

It appears the short term it looks like the grains are going to take the path of least resistance. Although USDA’s report was mostly neutral to the grains, weather remains slightly negative as rain continues to be in the forecast for the US southern Plains and Argentina.

Cattle struggled the first part of November with early selling tied to technical selling as traders try to correct an overbought condition. Pressure also came from a lower stock market as well as from economic concerns. Traders are back to expecting the Fed will be forced to increase interest rates another 0.75% in December due to low unemployment. Losses were also kept in check from weather forecasts calling for a brutal winter storm for the northern Plains.

In their November Crop Production estimate, USDA is now estimating beef production for 2022 at 28.35 billion pounds versus 28.14 billion last month and 27.95 billion last year. Production for 2023 dropped 90 million pounds to 26.28 billion pounds.

“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.”

What to read next