Wild weather and WASDE give direction to markets
Even as the central and eastern parts of the Corn Belt finally are making some planting progress, the western Corn Belt and northern Plains remain mired in wet, cold weather that has kept tractors at a near-standstill, especially in North Dakota and Minnesota, Don Wick of the Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discussed on the Agweek Market Wrap.
Even as the central and eastern parts of the Corn Belt finally are making some planting progress, the western Corn Belt and northern Plains remain mired in wet, cold weather that has kept tractors at a near-standstill, especially in North Dakota and Minnesota, Don Wick of the Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discussed on the Agweek Market Wrap. That's having an impact on the markets, along with the World Agricultural Supply and Demand Estimates and Crop Production reports, which came out this week.
"Tell me, in the grand scheme of things, is this a big deal, what's happening in this footprint, nationally?" Wick asked.
"We are significant," Martinson confirmed. He explained that both states are high on the list of corn and soybeans production. And North Dakota is the top spring wheat state. With the disastrous spring wheat crop in the southern Plains this year, that could mean that North Dakota ends up being the top in overall wheat production for 2022, he said.
Plus, he said, with world production troubles, including weather issues in a variety of places and the war in Ukraine, that makes what's happening here that could limit production all the more important on a global scale. The WASDE report, released Thursday, greatly reduced the expected production out of Ukraine. And the U.S. Department of Agriculture also already reduced the expected yield for corn in the Thursday reports, which Martinson said is highly unusual. Usually, USDA won't make changes like that until later in the growing season.
"So that is significant for the corn market," he said, adding that the USDA also made changes to the stocks that would indicate things are tighter than the agency wants to see.
- Recent grain prices drop is part of volatility to come in markets throughout the growing season
- From too wet, to too dry, weather takes control of market direction
- Planting progress strength met with eroding grain markets
- Market keeps taking hits after negative WASDE report
- Corn, soybean estimates show record yields, not quite record production
The planting delays mean farmers are getting close to the deadline for full crop insurance coverage for corn. That's May 25 in most of North Dakota and in northern Minnesota, Martinson said. Prevented planting may be considered, but "it's not because producers don't want to get out there and get things planted," he said. In some places, with recent rains, it's just not possible.
Even with the delays in planting, which could mean farmers will switch to soybeans, which has a deadline for full crop insurance coverage of June 10 in much of the region, soybeans still found strength this week on purchases from China, Wick said.
"It tells us that demand is still a little strong for old crop beans," Martinson said.
There also are concerns about planting progress for a variety of specialty crops, including canola, which gained this week on planting concerns not only in the northern Plains but also in Canada, but also on general demand for vegetable oil. Martinson said a similar scenario is playing out for barley; he has heard reports of beer companies contacting farmers asking them to increase acreage over concerns about barley production.
President Joe Biden visited Illinois this week to talk about inflation and food security and announced farmers in more counties will be able to double crop. A common scenario would be harvesting wheat and following it with soybeans. Wick asked Martinson if that would make much of a difference.
"Minor," Martinson said. "It's not the beans that we're short of." And with the price of soybeans already at $15, that's already incentive for double cropping soybeans. If that doesn't do it, another $10 per acre won't do it, he said. But he expects some double cropping will go on.
In cattle, futures and boxed beef were volatile, while cash held steady. The futures, Martinson said, looks at the economic factors that will impact consumer spending on red meats. With gas prices and interest rates high, consumers have less disposable income to spend on eating out, where 70% of red meat is consumed, he said.
Plus, he said tighter supplies that are likely to hit later in the second quarter haven't yet become a factor.
With all the areas of volatility, Wick asked whether Martinson expected things to calm down any time soon.
"Until we can give a significant amount of the crop in the ground and growing and seeing some movement as far as crop progress and crop development is concerned, I see this market being pretty volatile, and any kind of a weather hiccup is going to cause a sharp jump in the market," he said.
"We're going to be paying attention to every forecast aren't we?" Wick asked.
"Yeah I have a feeling we're going to become meteorologists before this is over," Martinson replied.
The Agweek Market Wrap is sponsored by Gateway Building Systems.