Wild Weather and WASDE Give Markets Direction - Agweek

Wild Weather and WASDE Give Markets Direction – Agweek

Even as the central and eastern parts of the corn belt finally make headway in planting, the western corn belt and northern plains remain mired in cold, wet weather that has kept tractors in shutdown, particularly in North Dakota and Minnesota, Don Wick of the Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discussed the Agweek Market Wrap. This is impacting markets, as well as global agricultural supply and demand estimates and agricultural production reports, which came out this week.

“Tell me, in the grand scheme of things, is this a big deal, what’s going on in this footprint, nationally?” Wick asked.

“We are important,” confirmed Martinson. He explained that both states are high on the list for corn and soybean production. And North Dakota is the number one spring wheat state. With the disastrous spring wheat harvest in the Southern Plains this year, that could mean North Dakota will end up being the best overall wheat producer for 2022, he said.

Additionally, he said, with global production issues, including weather issues in various locations and the war in Ukraine, it makes all the more important what is happening here that could limit production at the moment. global scale. The WASDE report, released on Thursday, significantly reduced Ukraine’s expected output. And the U.S. Department of Agriculture also already cut the expected yield for corn in Thursday’s reports, which Martinson said is highly unusual. Usually the USDA will not make such changes until the end of the growing season.

“So it’s important for the corn market,” he said, adding that the USDA has also made inventory changes that would indicate things are tighter than the agency wants.

Planting delays mean farmers are getting closer to the deadline for full crop insurance coverage for corn. It’s May 25 in most of North Dakota and northern Minnesota, Martinson said. Prevented planting can be considered, but “it’s not because growers don’t want to go out and have things planted,” he said. In some places, with the recent rains, this is simply not possible.

Even with planting delays, which could mean farmers will switch to soybeans, whose deadline for full crop insurance coverage is June 10 in much of the region, soybeans have still found strength this week on buying from China, Wick said.

“That tells us that demand is still a bit strong for old-crop beans,” Martinson said.

There are also concerns about the progress of plantings of various specialty crops, including canola, which gained this week due to seeding problems not only in the northern plains but also in Canada, but also due to the general demand for vegetable oil. Martinson said a similar scenario is playing out for barley; he heard that brewing companies were contacting farmers to ask them to increase their acreage due to concerns about barley production.

President Joe Biden visited Illinois this week to talk about inflation and food security and announced that farmers in more counties will be able to double their harvest. A common scenario would be to harvest wheat and follow it with soybeans. Wick asked Martinson if that would make a big difference.

“Minor,” Martinson said. “It’s not the beans we miss.” And with the price of soybeans already at $15, that’s already an incentive to double-crop soybeans. If that doesn’t do it, another $10 per acre won’t, he said. But he expects a dual culture to continue.

In cattle, futures and canned beef were volatile, while cash was flat. Futures contracts, Martinson said, look at economic factors that will impact consumer spending on red meats. With gas prices and high interest rates, consumers have less disposable income to spend on eating out, where 70% of red meat is eaten, he said.

Additionally, he said tighter supplies expected to hit later in the second quarter have yet to become a factor.

With all the areas of volatility, Wick asked if Martinson expected things to calm down soon.

“Until we can get a significant amount of the crop into the ground and growing and see some movement in terms of crop progression and development, I see this market being quite volatile, and any type of weather hiccups is going to cause a big increase in the market,” he said.

“We’re going to pay attention to every prediction, aren’t we?” asked Wick.

“Yeah, I feel like we’re going to be meteorologists before the end,” Martinson replied.

The Agweek Market Wrap is sponsored by Gateway Building Systems.

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