Markets shift into holiday mode, show promise for the new year

Friday, Dec. 22, ended a quiet, thinly traded ag market as holiday mode has certainly set in, according to Randy Martinson of Martinson Ag Risk Management and Randy Koenen of the Red River Farm Network. The two discussed the week in the market during the weekly Agweek Market Wrap.

Thin trading this week could be attributed to traders getting into the positions they want to be in before taking a holiday. Much action is not likely to be taken until the new year.

Some of the news of the week included rains in South America.

“Even though we’ve had rains in Brazil and the northern regions, the soybean market hasn’t sold off hard,” Martinson said. This tells Martinson that rains might not have been as significant or widespread as expected.

Martinson said there are some concerns about supplies on the soybean side. But wheat and corn are just drifting without much support giving them direction.

Koenen brought attention to soybean meal price fluctuations. Martinson responded that Argentina’s soybean crop is improving and has a big impact with 50% of the export market.

Koenen asked about the new export program for Argentina and if it gave an added push towards selling whole beans. Martinson said it does, but they have a lot of other issues to deal with.

“They are talking about doing away with their export tax, which I think would be close to impossible because it is one of the only revenue sources the country has,” Martinson said.

Martinson said another issue they have to deal with is high interest rates. if you think our interest rates are bad, they have interest rates around 100%.

Exports are coming against more roadblocks in the U.S., too. Koenen noted the slowed exports out of the Panama Canal, closings of

crossing on the U.S.-Mexico border,

and continued low river levels on the Mississippi River.

“Just about all of our southern ports of exports are seeing some sort of issue at this point,” Martinson said. Right now, the Pacific Northwest and Thunder Bay are about the only ones not having issues.

The closures at the Mexico border are adding up to economic losses as they have the potential of about 1 million bushels per week not moving. It’s not an issue of the exports getting down to Mexico, but the rail is not coming back up as that is where the migrant issues are arising.

Martinson shared that there has been volatility in the cattle market with gains and losses recorded throughout the week. Things may solidify some with significant reports coming out Friday, Dec. 22, at 3 p.m. The

Cattle on Feed report

and

Hogs and Pigs report

will be digested over the long Christmas weekend.

Martinson said the Cattle on Feed should be friendly as it’s expected that placements are lower. The last Hogs and Pigs report showed a hint of more hogs, whereas this one is expected to show a calming of that increase.

Koenen asked if it’s normal to see a lull at this time of year for the livestock market.

Martinson said it’s normal to see an increase in demand for the beef market. That would hopefully bring the packers back in and buying. There are heavier slaughter weights, but if buyers come back, perhaps those numbers will lower.

Martinson is hopeful that recovery will come in early 2024 if the economy can continue to pick up and encourage consumers to go out to eat.

Some rain and moisture is expected for the Midwest, yet the expansion of drought is expected to continue into 2024. That’s something that could make markets a little more volatile as buyers and sellers keep a close eye on moisture levels.

“Early indication is that we could be looking at a little bit drier year for 2024 for our production growing season,” Martinson said.

Looking ahead, Martinson said he’ll be watching the weather in South America; he’s hoping a resolution can be found to reopen blocked ports; and he believes the dollar, which has been under pressure, is helping across the markets.

(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.