'Ugly week in the grains' attributed to interest rate rumors, China rumors and weather change

AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management talked about an "ugly week in the grains" during which most commodities were down and many were limit or expanded limit down. But is that the end of high prices? Maybe not.

It was "an ugly week in the grains," AgweekTV's Michelle Rook said, with a huge sell off on Thursday that left many in the commodities markets scratching their heads.

Randy Martinson of Martinson Ag Risk Management said it was the biggest sell off he's seen, with "indiscriminate selling" hitting every sector of the commodities, not just ag commodities.

There were many reasons for the sell off. Among them was Fed Chair Jerome Powell hinting at a possible interest rate hike in 2022, which also affected the stock market this week. Another factor were rumors that China was trying to limit purchases in order to limit food inflation. A change in the weather forecast, with more cool temperatures and chances for moisture, may have played a part, too.

As far as the China factor goes, Martinson said that might not be a lasting reason for down markets. There were rumors Friday of Chinese organizations buying eight cargo loads of soybeans for October delivery. Not all of the sales were confirmed. As Rook pointed out, it was a good time to buy with depressed prices on the board.

"It was a bargain for them," she said. "Why wouldn't they buy?"


Soybeans, Rook said, took the worst of the hit for the week. But Martinson doesn't think that market is done. He likened it more to everyone running for the door at the same time.

All it will take for that market, and others, to come back is another dry pattern, he said. The drought is no longer just a Northern Plains issue, with Iowa and Nebraska seeing worsening conditions on this week's U.S. Drought Monitor.

Cattle had a good week, though they fell with everything else on Thursday. Part of that, Martinson said, is the hot weather leading to poorer feedlot performance. Hogs, however, fell off. Martinson said the hogs and pigs report due out next week will tell the story of where the hog market goes from here; tight supplies in the forecast likely would lead to a resurgence in the market.

To watch previous episodes of the Agweek Market Wrap, click here.

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