The northern Plains head into the weekend with hazy skies, brought on by wildfires, not likely helping temperatures rise during a time when the crop needs some heat units.
The effect of the lack of growing degree units was a central topic on Friday, May 30, during the Agweek Market Wrap with Randy Koenen of the Red River Farm Network and Randy Martinson, president of Martinson Ag Risk Management.
Martinson summarized some weather factors that could pressure the grain markets, including heavy rains, cooler temperatures, strong winds and some isolated frost damage. The heavy rains that held up planting in parts of North Dakota could lead to as many as a half million acres of corn not being planted there. It’s likely that estimates for corn planted in the state will fall short, while soybean acres may see an increase.
The conditions are plaguing wheat conditions in North Dakota and Montana. A 26% drop in crop conditions is the lowest in 37 years, Martinson explained.
Even with these factors against the grains, it seems the funds are paying more attention to the likelihood that temperatures are expected to make a rebound in the coming week, which should start to turn conditions around.
“So yeah, it's going to be interesting to see just what happens with these crop progressions, and that's going to be pretty important moving forward,” Martinson said.
Koenen made mention of a few export sales happening, which are mainly corn. The U.S. is the main supplier of corn right now with the cheapest corn in the world available. Corn is not responding to these sales, however.
Upcoming reports could give some insight into what might move the markets in the future. A June 12 World Agricultural Supply and Demand Estimates report comes first, then a crop progress report comes at the end of June. Martinson said the crop progress report should offer the numbers that cause the most adjustments for the USDA crop estimates.
Another headline having some impact would be continued back-and-forth tariff talks. These continued talks are likely having foreign buyers simply sit back and wait for more certainty to return, Koenen said.
“I’d wait and see what happens, and just kind of drag this out,” Koenen said.
As the calendar turns to June, Martinson said it’s likely that markets will put extra attention on weather as the growing season progresses.
Livestock
Headlines remain the driver for the livestock markets. A false headline of New World screwworm entering the U.S. sent the market down earlier in the week. The market rebounded quickly thanks to the fundamental factors still at play — low supply and strong demand.
“Right now the cash side and the futures are winning,” Martinson said.
With the start of barbecue season, demand for all meats should grow domestically. A shift seen is that consumers are ordering less beef at the restaurant and buying more for cooking at home.
The lean hogs market has been bouncing back and forth this week. It is likely to see some pressure from cooling relationships between the U.S. and China.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)