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Higher than expected hog numbers, negative crop reports, a looming government shutdown and friendly weather spelled trouble for the markets to end the week on Friday, Sept. 29.
“Every single market was red on Friday. There was no positive performance in anything,” said Randy Martinson of Martinson Ag Risk Management in his chat with Randy Koenen of the Red River Farm Network during the Agweek Market Wrap.
Not just red, but double digit red and even triple digit red for livestock, Koenen added.
The U.S. government shutdown that would start Sunday, Oct. 1, won’t impact essential workers, and those staff will eventually get paid, but the public looking for timely reports and assistance could be left out.
Martinson and Koenen recalled previous shutdowns and their ill effects. Martinson said some key reports that don’t get done in a shutdown are yield reports, exports, crop production and survey data.
Aside from a shutdown the recent crop stocks reports spelled trouble for crop prices. More wheat and soybean stock than expected hurt those grain prices. Koenen wondered how the estimates could have been so far off for soybeans. Martinson concurred that soybeans came in at 26 million bushels above expectations, while corn stocks were 68 million below expectations. Wheat, too, came in far above expectations.
“That shouldn’t have snuck up on them as much as it did,” Martinson said.
If the government would stay open, it will return to
harvest pressuring the market.
Meanwhile, wheat is so beat up at this point that it needs some good news.
Good news has not been coming for exports from the U.S. Export sales of soybeans are about 30% behind last year. Corn is better at just about 6% behind last year, Martinson said. Martinson shared that the stronger dollar isn’t helping this. As the dollar rises in value, it becomes less expensive to buy corn and soybeans from South America.
Water levels in the Mississippi River are having an impact on exporting grain towards the Gulf of Mexico. It now costs more to ship on the river because they cannot carry as much on the barges. That hits the central corn belt and sends more grains out through the Pacific Northwest. This affects the basis levels and disrupts what grain gets shipped.
Higher hog numbers hurt the cattle market, but that’s after cattle were seeing contract highs for weeks. Martinson said cash is still holding up well at the sale barns. Producers are going to take advantage of the higher price and continue to send calves to feedlots. A lower corn price also helps that market.
“I look for a lot of (calves) to start going to the feedlots because this is a price that’s never been seen before, and I think a lot of guys are going to take advantage of that,” Martinson said.
As has been the advice for several weeks, Martinson said eyes will also be on the price of crude oil, which has been flirting with $100 a barrel and the value of the American dollar holding up strong. Those have the power to tighten spending and shrink exports.
(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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