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The
August World Agricultural Supply and Demand Estimates came out on Friday morning
, and Don Wick of the Red River Farm Network said there were “a lot of eyes, a lot of attention focused on these numbers.”
Though the report showed smaller soybean and corn crops than earlier anticipated, Wick said markets for corn and soybeans first went higher before closing the day down.
Randy Martinson of Martinson Ag Risk Management the numbers in the report “weren’t so bad” for corn and soybeans. He consider the cuts to be neutral to negative to corn and friendly to soybeans. Meanwhile, the WASDE was negative to soft red wheat and the hard red winter wheat markets but friendly to spring wheat because of cut production numbers.
His interpretation of the market backing off toward close on Friday was that the trade is looking at other things, like weather, and, especially, trimmed demand.
Not only were export numbers cut for corn, soybeans and wheat, but domestic use also was cut in the report for corn and soybeans, he said. That’s, in part, because of lower hog and cattle numbers and less need for the crops in domestic feed supplies.
“We are continuing to see demand kind of suffer,” he said.
That means a change stocks could build later. Lower prices, Martinson said, could spur more demand, which would keep those stocks lower.
Corn likely won’t see much more in the way of yield cuts, as it is out of critical crop development stages, Martinson said, explaining that stocks won’t go much lower for corn without increased demand.
“Corn, it’s a tough road ahead,” he said.
Wick pointed out that the WASDE reflected conditions as of Aug. 1, and a lot of rain has fallen in parts of the Corn Belt since then. Martinson said it seemed likely that the report took that into consideration and didn’t cut as far as the conditions on Aug. 1 would have indicated.
“Really, the crop has improved dramatically,” he said. He added that the amount of corn and soybeans in drought conditions continues to drop, according to the U.S. Drought Monitor, while the amount of spring wheat in drought increases.
The upcoming Pro Farmer tour, Aug. 21-24, will be an important event for the trade, as actual observation of fields by walking through, looking at cobs and doing more than driving by, will provide more information on what crops look like through the Corn Belt, Martinson said.
In cattle, Wick pointed out that the cash cattle market was strong on Friday, and Martinson said that helps the contracts a little. Since hitting contract highs, cattle have since backed off. Packers are slowing down chain speeds and not having Saturday kills because of lower domestic demand. Martinson said he expects a “flurry” of cash purchases by packers when they need cattle other than the “formula” cattle they mostly rely on.
Interest rates will continue to be a factor in the markets, Wick and Martinson said. Martinson said it will be part of the story as to when producers move products and how much grain is stored.
Moving forward, Martinson said Monday’s crop progress and especially information about development stages of soybeans will be one to watch. Also of importance to the markets will be crude oil, the dollar and what happens in Russia and Ukraine.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)
Jenny Schlecht is the director of ag content for Agweek and serves as editor of Agweek, Sugarbeet Grower and BeanGrower. She lives on a farm and ranch near Medina, North Dakota, with her husband and two daughters. You can reach her at jschlecht@agweek.com or 701-595-0425.
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