A sharp decline in grain and oilseed prices on Thursday was followed by a big turnaround on Friday, and Randy Martinson of Martinson Ag Risk Management told Don Wick of the Red River Farm Network on the Agweek Market Wrap that it appears to have been a combination of profit taking and positioning ahead of the three-day Labor Day weekend.
Thursday’s decline in wheat and corn, he said, may have been overdone, as inventories look likely to be tight for both commodities. However, soybeans were the highlight as demand continues to be strong. Nearly 2 million metric tons of sales to China and an unknown destination have been announced – and there could be more.
after snafus with a new system launched at the end of August.
September 1 also kicked off a new year of marketing. Martinson said weather-driven demand in China and Europe, as well as continued export difficulties in Ukraine, will be part of the new crop story.
External markets had some impact on commodities this week. Wick pointed out that crude oil fell from $97 on Monday to the low range of $80 at the close on Friday. In addition, the US dollar has reached highs. Martinson said the high dollar tends to hurt commodity exports, and that’s the case for wheat. However, China and an unknown destination continue to buy soybeans because they need them regardless of the price.
And, as he noted last week, Martinson said Fed Chairman Jerome Powell’s repeated talk of the “pain” ahead in the economy continues to temper the market.
“It sent a shiver down the spine of not just the stock market, but commodities as well,” he said.
The spring wheat harvest continues and there continues to be a west-east disparity in yields, with western North Dakota generally seeing more positive results. However, the northern level harvest “still has a ways to go,” Martinson said, and how that unfolds could set the tone for North Dakota’s wheat production.
A frost-free September, or at least most of it, could help wheat as well as other crops. Soybeans, in particular, could see “a pretty good crop” in some places after some late-season rains, Martinson said.
In meat markets, Memorial Day, July 4 and Labor Day are considered prime grilling season, and demand for meat shifts after that, with a greater focus on government purchases for school lunches and the military, Martinson said. He said there was hope for strong demand for beef and pork. If it hadn’t been for the economy, he thinks cattle would be performing much better today than they have.
Trading will resume on Monday evening, and Martinson said it looks like the markets need a break and time to regroup. Crop progress reports will not be released until Tuesday afternoon, so weekend weather could be an early driver next week.
The Agweek Market Wrap is sponsored by Gateway Building Systems.