The June WASDE was generally neutral wheat, negative corn and friendly to soybeans, Randy Martinson of Martinson Ag Risk Management told Don Wick of the Red River Farm Network on the Agweek Market Wrap. With that out of the way and the USDA's acreage report still a few weeks out, all attention turns to the weather.
- 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
Martinson said the report, released Friday morning, was a "non-event" for wheat, though one surprising piece included a forecast for increased wheat production in Russia. The report was negative for corn, which similarly included a somewhat unexpected increase in corn acres in Ukraine. Both of those things, Martinson said, were largely a "true-up" of production expectations in Russia and Ukraine after deep cuts in last month's report.
Corn still posted gains on Friday, but Martinson said that was largely weather related.
The report was friendly soybeans, as an increase in exports meant decreased stocks in old and new crop.
The USDA's acreage report, due out June 30, will likely lead to some changes in production numbers. And until then, Martinson told Wick the story of the market likely will revolve around weather.
ADVERTISEMENT
Even in the northern Plains and upper Midwest, where wet conditions have greatly slowed planting, farmers still have been getting wheat and corn in the ground, sometimes by going around wet spots and potholes, Wick said. Martinson said he believes, however, that some fields did not get planted into the anticipated crops and will end up in soybeans or sunflowers. However, he thinks dry edible bean acreage, along with corn and wheat, will be trimmed in North Dakota, South Dakota and Minnesota.
However, in the rest of the U.S. and the Corn Belt in particular, Martinson thinks we could see an increase in corn acreage as their planting season was less eventful.
Now, developing summer heat could tell the story of the crop. He said Illinois is expected to see 90 F or higher temperatures for the next 11 days. Normally when that kind of heat sets in, the crop has canopied, allowing it to protect itself somewhat from the elements. However, the corn is still in a much earlier stage, which could lead to fields drying out. And some forecasts are calling for the extreme heat to last even longer.
On the global stage, markets watched the back-and-forth as the United Nations worked to try to get Russia to allow Ukraine ports to open to move exports out to get grain to countries struggling with food insecurity. Martinson said the fact that Ukraine was not involved in those talks "makes you wonder about how things are going." He believes Russia only is pushing to have ports opened so other countries will lessen sanctions on the country. Russia also reportedly blew up a Ukrainian grain storage facility, leading to further doubts about how serious they are about allowing exports.
The Consumer Price Index this week sent the Dow lower, plus energy markets keep pushing higher, Wick said, asking what that means for monetary policy and spending. Martinson said he expects the Federal Reserve will again increase interest rates.
"That's going to continue to take a little more of a bite out of the consumer discretionary income that's left," he said. That means less money to eat out and to buy higher price protein sources, which could hold down domestic demand for beef and pork.
However, strong exports and tighter production numbers of both beef and pork should be friendly to the markets.
Wick said the liquidation in the cow herd seems like a positive for the industry. Martinson confirmed that, pointing out that cow slaughter numbers are 15% above this time last year, with more heifers going into feedlots.
ADVERTISEMENT
"We're seeing a dramatic cut in regard to the potential breeding herd," he said.
The Agweek Market Wrap is sponsored by Gateway Building Systems.
The Trust Project
