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Randy Martinson of Martinson Ag Risk Management and Randy Koenen of the Red River Farm Network looked back on a week of ups and downs in the markets during the Agweek Market Wrap on Friday, Dec. 1.
While Black Friday hit some markets harshly, they had some reasons to feel bullish after a much stronger export performance for corn, soybeans and wheat this week.
“It shows that we can move the product when the price is right,” Martinson said.
“Even on one less trading day,” Koenen said, as the previous market week included the Thanksgiving holiday.
The lower U.S. grain price has even slowed exports out of South America. Koenen noted that the U.S. is about $40-$50 a metric ton lower than competition. Soybeans coming out of the Pacific Northwest are currently the cheapest to ship. With South America in a hurry to ship out record grains, their ports are feeling the stress.
“We’ve got a story that is improving as far as demand is concerned for the U.S. products,” Martinson said.
Soybean exports have picked up due to some of the issues South American growers are facing. Martinson noted that his contacts in South America are saying there could be a 30-60 day delay in harvest due to the delayed planting. Many growers are still determining how to proceed and what to grow as they are faced with dry conditions.
This news should mean that the South American crop should be lower than the record crops they produced in the previous season.
“We know it’s going to be smaller, but how much smaller?” Martinson wondered.
As was mentioned, Black Friday was a dark day for some including the cattle market. Martinson mentioned that there are rumors of herd expansion, but he isn’t buying it.
He explained that he’s watching as breeding rates fell and more beef are coming to town, including imports from Mexico and Canada. But he is not seeing an expanding herd. Koenen noted that he’s heard of some dairy cattle being bred to beef because of a higher return and faster turnaround.
Taking a look at the pork market, Martinson noted that China is having some concerns about their herd.
“Hopefully that means we can start to see some demand pickup after the first of the year and we can start to see some demand maybe come from China,” Martinson said.
Looking ahead, Martinson said it’s wise to keep an eye on crude oil. The price has been going back and forth, but as it is lower, it may be wise to lock in fuel purchases soon.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)
Michael Johnson is the news editor for Agweek. He lives in rural Deer Creek, Minn., where he is starting to homestead with his two children and wife.
You can reach Michael at mjohnson@agweek.com or 218-640-2312.
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