Posted on July, 21, 2024 at 08:58 pm
In a week where stock markets flourished, grain markets continued to flounder — all except for Minneapolis wheat, which ended the week with gains.
That was one bright spot, according to Randy Martinson of Martinson Ag Risk Management as he talked about markets with Randy Koenen of the Red River Farm Network during the Agweek Market Wrap on Friday, July 19.
As a whole, Martinson said it appears the grain markets may be reaching the bottom, especially for wheat. Weather and demand may be involved in that recent boost.
Weather remains the big focus and market mover moving forward across the grain markets. Hot and dry weather forecasted for the northern Plains was enough to give some strength to wheat according to Koenen. Martinson added that while production estimates for spring wheat are strong in the northern Plains, there are worries about not enough high-quality wheat to blend with around the globe. While hot and dry conditions could be troublesome, many producers who have sitting water would appreciate some drying action to take place.
That’s especially true for corn and soybean producers who await more heat to kickstart growth. Koenen spoke of the wheat he had seen and how good it looks. Corn seems to be across the spectrum with some just hitting knee-high and others tasseling overhead. Meanwhile, soybeans are largely slow to grow with continued cooler temperatures, according to Martinson.
“We know that that frost is coming at some point,” Martinson said.
Overall the market has not paid much attention to weather. But that’s because much of the Corn Belt is seeing excellent conditions.
Demand has picked up some for U.S. crops despite China continuing to be largely absent. Martinson said U.S. corn and soybeans are now the cheapest in the world, so demand should be taking off.
Looking ahead, Martinson said the USDA has noted that they intend to resurvey acres for wheat, corn and soybeans. Martinson said it’s likely there will be adjustments in acres for all three crops.
Weather will remain the main driver of the market moving ahead. The August forecast is calling for above-normal temperatures and below-average moisture.
The Agweek Market Wrap was recorded prior to the Cattle on Feed report coming out on Friday, July 19. Koenen described the livestock markets as “all over the place.”
Martinson said that there was good news of possible interest rate decreases from the Federal Reserve. That was a boost to the stock market. It was also a help to livestock markets, but they seemed to not respond to the news.
“And we’re also starting to hear a little more grumblings about herd expansion,” Martinson said. With better pasture conditions, lower grain prices and strong prices for beef, growers are perhaps looking to hold on and grow their herds this year. That would be a turn from the herd reductions of recent years that have helped to push cattle prices to record highs.
Koenen pointed out another bright spot in the market was lean hogs.
“And it needed to be,” Martinson said of the hog market that has been beaten down in recent weeks. He said it appears like a technical correction is taking place. Martinson said this is a market that needs increased demand globally.
In other areas, Martinson said crude oil has been lacking direction. The dollar took a hit this week and that has been helpful on the export side of things. Overall, look for weather to be the key market mover as we head toward August.
Source: AG Week