Year ends on volatile note with wheat making ground
Randy Koenen of Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discuss what's going on in the agriculture market around the world on the Agweek Market Wrap.
Market analysts expected the end of 2022 to be a volatile one, and it was indeed, as was discussed by Randy Koenen of the Red River Farm Market and Randy Martinson of Martinson Ag Risk Management during the weekly Agweek Market Wrap on Friday, Dec. 30.
“We expected some volatility and boy did we get it this week,” Koenen said.
Martinson agreed, saying that it led to some grain price increases.
“Wheat came alive this week,” Martinson said. “Nice gains going into the end of the week.”
Martinson pointed out some things supporting the wheat market included weather issues, decent exports, rumors that Russia is planning to increase their export tax, and an escalation of Russian missile attacks.
Koenen pointed out that eyes continue to be on South America as there are reports of a lack of rain that could be hurting Argentina and parts of Brazil .
“Argentina is likely going to cut their soybean acres by a million, (1.2 million) because of the dry conditions, all that helping to really push that soybean market,” Martinson said.
The hot dry conditions are not just hurting the planting, but the existing crops, too.
Another painful report coming out of China is the large amount of COVID-19 cases showing up as the country has moved to loosen restrictions on travel and quarantine.
“Wondering just how long that China will continue to do that, or if they will put restrictions back on, or if once they get through it, it certainly will help the demand structure,” Martinson said.
Export sales have been doing well. Martinson said it will be interesting to see how exports could increase once China gets over the jump in COVID-19 cases. Martinson is hopeful that that could show a boost to the demand for U.S. corn.
Live cattle are seeing contract highs going into the end of the year and should continue to build off slim supplies.
“We’ve been seeing dollar gains, but live cattle putting in six straight contract highs … they know our supplies are going to be tighter moving forward,” Martinson said. “After the first of the year, we’re really going to see tight supplies. That, I think, will continue to help the live cattle.”
If corn keeps going up in price that will likely put a lid on the feeder cattle price, however.
Winter weather moving through the Plains will continue to put stress on cattle and grain movement.
“It should help us, support us a little bit, but … if it delays marketing too much we could start seeing heavier weights start to come to town.”
Martinson is pleased with the 2022 markets. He pointed out volatility has been there, but corn is up almost 20%; soybeans are up about 20%; wheat is virtually steady.
“We’ve had a good push in this market, you know it’s going to be tough to continue to hold this strength for the third year in a row, but if we start to see some production issues, we could see this market continue to hold some good strengths,” Martinson said.
“Twenty-two was a good year – hopefully we can start ‘23 off in a good spot,” Martinson said. “We’ll see some volatility to continue at least for the first few months of the year. I think that will give us some opportunity to make some pretty good sales.”
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)