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Wheat market looks strong and could get stronger with end-of-the-month report

AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management talked about wheat's week as leader of the grains, the early harvest returns for corn and soybeans, and a search for the market bottom for cattle and hogs.

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Wheat was the leader of the markets this week, as other major exporting countries, including Canada, Russia and some European Union countries showing lower production estimates.

But as other countries predict less wheat, the U.S. is yet to pick up much new business, AgweekTV's Michelle Rook and Randy Martinson of Martinson Ag Risk Management said on the Agweek Market Wrap, sponsored by Gateway Building Systems.

"It would be nice to get some of that business brought over to the U.S.," Martinson said.

Even without that business, wheat prices were up this week, and the Quarterly Stocks Report, due out at the end of the month, is expected to be fairly bullish. That's especially in light of the Northern Plains drought, which is expected to have led to higher than normal acreage abandonment. Martinson said 3% is built into the market, but the drought year of 1988 led to 15% to 18% abandonment. This year, he wouldn't be surprised to see 10% abandonment, or 1 million acres.

"I do think we'll see some adjustments," he said. "And if we do see abandonment go up, we'll see yields increase too, but kind of offset each other."

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The strong wheat market is leading to more winter wheat planting, he said.

Meanwhile, disappointing corn and soybean yields are impacting those markets, but so are port outages due to hurricane damages.

Corn basis levels are strong, because end-users need product, Martinson said. And the ports do expect to be back on line soon.

"Most are getting there, but some of the bigger ones . . . they're saying by the time harvest gets into full gear they will be ready," he said.

The U.S. saw a soybean cancellation when China backed out due to port problems and instead bought from Brazil. That hurt, because the U.S. typically has strong sales around harvest time, Martinson said, calling it a "slap in the face."

"That's traditionally our sandbox and we're not supposed to have Brazil in it," he said.

Cattle and hogs both are dealing with demand concerns, Martinson said. But especially for cattle, supplies are tightening and will continue to tighten due to herd downsizing due to drought.

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

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