An interesting quarterly report from the USDA led to lower corn and wheat stocks, according to this week’s Agweek Market Wrap with Don Wick of the Red River Farm Network and Randy Martinson of Martinson Ag Risk Management.
The big market influencer for traders this week was the quarterly inventory and planted acreage report the USDA released on June 30, in which the number that stood out for both Wick and Martinson was the acreage of soy. Martinson said he didn’t expect to see the United States lose more than 2 million acres of soybeans compared to expectations.
“It was a bit deeper cut than I expected on the soy side,” Martinson said.
However, Martinson said a new survey coming for Minnesota, North Dakota and South Dakota could mean those numbers will change. He expects the updated numbers to show lower numbers for wheat and corn in all three states, and a slight increase in the number of soybeans.
Less reported acreage and good growing conditions mean there is more pressure for a good crop this year, Martinson said.
“That puts a lot more pressure on the trendline, or better than the trendline returns needed to be accomplished this year,” Martinson said. “Especially on the soy side”
Martinson said this would be an interesting report on grain stocks coming July 12, which he said will show “huge” reductions.
Wick said corn and wheat stocks had a “pretty lousy” weekend. Martinson said the funds were “essentially bailing out” their positions. He said that was partly due to being ahead of a long weekend, but talk of the recession and fund sell-off also played a role in those stocks’ declines.
“I think some of what we saw was also related to better weather forecasting,” Martinson said. “They’re talking about cooler, wetter conditions for the corn belt, and I think that’s really what the trade is looking at.”
Logistical issues have been raised in every recent Agweek Market Wrap, including this week’s, as a protest by truckers in Argentina threatens grain exports and ongoing port labor negotiations on the coast. west before the Friday night expiration of the contract covering more than 22,000 workers.
Martinson said these stories have had an influence on the markets as the base levels continue to be strong and a “broad reversal” has been seen in the markets.
“It tells us that supplies are limited and end users want the product,” he said. “He just has a hard time integrating it.”
The Agweek Market Wrap is sponsored by Gateway Building Systems.