Trudging market led by failing weather conditions in Argentina

Argentina’s worsening weather conditions were a main topic during the Friday, Feb. 17, Agweek Market Wrap with Red River Farm Network’s Don Wick and Randy Martinson, president of Martinson Ag Risk Management.

“We are starting to realize that Argentina’s crop isn’t in as good a shape as we were expecting,” Martinson said. “Again they keep flip-flopping the weather, we continue to see disappointing rains, we continue to see decreases in their production estimates."

Forecasts for next week show it’s not going to be as hot, but still dry in Argentina. If forecasts continue to show rain in northern Brazil and no rain in Argentina it should push the soybean market higher.

Wick noted that USDA will have their Ag Outlook Conference next week. He wondered what stock traders put into this conference.

Martinson said the USDA’s outlook is pretty accurate for several years out. They can gauge where demand is going to be and give some insight on crop acreage for producers.

“So I think the trade is going to look really, really hard at where corn acres come into play, where soybean acres come into play, mainly because right now with the lower input costs, it looks like we’re pushing more acres to corn and pulling some away from soybeans.”

Wick pointed out that the fertilizer costs look to be going down for producers, a big plus for the bottom line. That along with crop insurance price announcements make it look like corn will be favored over soybeans.

Martinson agreed and said that corn is about equal to last year prices. Soybeans are a bit lower. Spring wheat is also lower and about a dollar lower than durum prices.

“So we could see a little drop in spring wheat acres, Martinson said.

Natural gas prices showed a drop along with crude oil prices. Natural gas prices fell by 41% since December 2022, according to the U.S. Energy Information Administration. Martinson said those changes give the market some direction. With crude dropping, it can hit the biofuel industry.

Wick noticed that in recent weeks the market goes right to the bitter end of the week before activity for cattle. Martinson agreed that action happens in the 11th hour.

“The cattle futures market has been trading at contract highs and the live cattle market seems like we go up to contract highs then we back off again,” Martinson said.

Martinson believes that the market is concerned about tight cattle supplies, yet it also has its eyes on the economy. The threat of another interest rate hike could hold back consumers from buying the beef.

“I think that’s kind of helped put the sloppiness in the cattle market this week,” Martinson said.

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