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It was a shortened week, following the New Year’s holiday, even so there were dismal sales in the grain market to kick off the new year.
“Dismal is probably the best way to put it,” according to Randy Koenen of the Red River Farm Network.
That downward trend was discussed by Randy Martinson of Martinson Ag Risk Management and Koenen on Friday, Jan. 5, during the Agweek Market Wrap.
It’s not that nothing is happening in the world to have some impact. Conflicts are ongoing between Russia and Ukraine.
Ukraine is dealing with export issues,
where they can export. The Middle East remains a source of unresolved conflict. Weather issues abroad are leaving questions as to what type of crops or yield will come out of South America. Cold in Russia may be causing some amount of winter kill.
Closer to home, on the northern Plains, it seems
the weather can’t decide if it’s winter or spring.
“We can’t decide if we’re north or south of the Mason-Dixon Line,” Martinson said of the current weather. “We continue to get this rain mixture. I guess snow right now would be OK.”
That slick weather seems to have impacted grain movement in the northern Plains, which is slow going.
That’s in contrast to the shortened Thanksgiving week, where big sales of corn, soybeans and wheat were recorded.
“We haven’t seen a flash export sale of corn since, I think, Dec. 8, we haven’t seen one for soybeans since Dec. 19, so it’s been a while since we’ve had some sales reported,” Martinson said.
The futures market seems to reflect that, Koenen said.
Martinson said with prices cheap enough there are still rumors of China coming in and buying wheat. But despite everything going on, it seems wheat just can’t get its footing.
“We’ve been waiting for that, since the Russia/Ukraine thing first initiated, everybody expecting some of that business to come to the U.S., but it just hasn’t materialized,” Koenen said.
Martinson said the biggest deterrent has likely been the fact that Russia has been pumping out big crops and dumping them in the market.
Related to that big crop, reports have come that Russia and Ukraine may be seeing some winter kill as they are experiencing extreme cold in recent weeks.
“Hopefully that will bring that Russian production back off of record highs and then would allow the U.S. to start coming in there and at least be part of the discussion on exports,” Martinson said.
The two briefly discussed exports of wheat and noted that there continues to be some struggles with low water for shipping out of the Gulf and the Panama Canal. Spring wheat has not been moving out of the Pacific Northwest because of soybean and other wheat movement, such as durum and winter wheat.
Koenen shared on the topic of competition with Canada over wheat. In a recent talk at the Lake Region Extension Roundup, the thought was that the U.S. may have a competitive advantage over Canada. Martinson said the lower pricing makes them more competitive than usual.
Koenen and Martinson agreed that next week’s Supply and Demand report could shake things up nicely. Martinson said there are rumors that Brazil’s soybean crop will come in below 150 million metric tons, which is a stark drop from the estimated 165 million. The drop is expected due to erratic weather patterns that have left parts of South America dry. Recent rains may be too late to have an impact on the damage already done.
Martinson believes more normal trading should come back into play now that we move beyond the Christmas and New Year’s holidays.
Koenen described the livestock market as slowly digging back out of a hole. Martinson agreed that there was good movement earlier in the week but it is taking time to grow after such a big drop in the market this fall.
Martinson said the next Cattle on Feed report could be a boost, though it seems what remains are a growing pork supply and a cattle supply that is slow to grow.
“It’s very unlikely that we are seeing any herd expansion as far as the beef sector,” Martinson said. He added that more pork is going to add competition for beef at the supermarket.
Koenen surmised that the open winter pattern we have seen so far could have an impact. Martinson agreed that cattle will gain faster and finish faster. We may be seeing higher slaughter weights due to an easier winter.
Looking ahead, Martinson said the markets will keep an eye on the dollar, which is making a recovery. Another important factor is the price of crude oil.
Right now, with conflicts in Middle East, it may be time to get those fuel contracts in place while prices are lower.
(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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