Corn and soybeans have been trading in a narrow range for nearly a month, Don Wick said on this week’s Agweek Market Wrap.
“What’s going to get us out of this sideways pattern?” he asked Randy Martinson of Martinson Ag Risk Management.
Martinson said even new news doesn’t change the range much, and it seems the market wants to verify everything. Traders seem to be looking to South American plantings for more information.
“I think they’re waiting to see where the acres fall,” he said
While soybeans have had export business from China and Mexico, corn is looking for trade. Martinson said corn is already missing major buyers, and news that Mexico plans to go ahead with its intention to stop importing GMO corn by 2024 isn’t helping the outlook.
As for South America, dry conditions remain there, although Argentina has caught some rain this week that will help their already-planted and soon-to-be-planted corn and soybeans. Wheat is in a tough shape and won’t be helped that much.
In the US, drought continues to hamper grain traffic on the Mississippi River, where historically low levels have impacted barge transport. Because of the difficulties in getting grain through the river system, there is increased demand for it by rail to the Pacific Northwest. That, Martinson said, has helped grassroots levels, as end users — particularly for soybeans — have bid aggressively. This is a good sign for farmers, given the many soybean plants planned and under construction.
“Let’s hope most of those get built,” Martinson said.
The fall prices for crop insurance are set on October 31. Martinson said corn is up 16% from February, soybeans are slightly lower and sunflowers are also higher.
As for the livestock, Wick said packers had to “pay” for cash livestock. Martinson said there has been a marked slowdown in the number of cows coming to the butcher, leaving packers more dependent on pasturage.
“We’re only going to see supplies tighten as we move forward,” he said, noting that this will be a driver for livestock markets.
Martinson thinks the market is expecting a 0.75% rate hike from the Federal Reserve in November and has already factored that in. What happens in December will “set the tone for greater impact,” he said.
The “winter doldrums” may begin soon, as the harvest ends, Martinson said. Traditionally, wheat and corn start moving in November, so he said that’s something to watch out for, along with base levels and demand.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)