Corn, wheat and cattle were higher Tuesday, soybeans and wheat ended lower.
Wheat Makes New Highs
Wheat futures were up 25 to 30 cents and the hard red winter and hard red spring wheat both hit new contract highs, with soft red winter wheat also hitting new highs for the move.
Randy Martinson with Martinson Ag says the wheat market is adding risk premium tied to weather and global production and geopolitical concerns.
“I mean, most of it is weather because we’re looking at the dry conditions, rain being pulled out of the forecast. That really helped to push the market today. The fact that we continue to see the Strait of Hormuz closed and the idea that we could get some exports or some U.S. wheat moved into that region in the Middle East, continuing to help add some support,” he explains.
There are also concerns about tight fertilizer supplies globally.
“Lots of countries talking about cutting back on production or on acres because of the high cost of fertilizer and the tight supplies are hard to get. So I think all of that’s coming in to help push the wheat market,” he says.
Wheat Conditions Deteriorate
Hard red winter wheat ratings were steady at 30% good to excellent on Monday but the poor to very poor rating was up 2% which also gave the market a boost.
“The fact that we did see the increase in the poor to very poor, I think that did help push the wheat here. Then the weather forecast coming in later, taking the rain out or pulling some of that rain event out, added to it towards the end of the session,” he says.
Spring Wheat Planting Delays
Spring what planting delays are also supportive with 19% of the crop planted compared to the 22% five year average.’
He says, “You look up here in spring wheat country, in North Dakota we did get a little bit of progress done here this last week, but rain and cold
temperatures are in the forecast now. This week doesn’t look like we’re going to see a lot of activity taking place as a lot of the areas are just a little too wet and we’re not getting the heat to dry out the soil. So we’re going to see another week of poor progress as far as planting is concerned.”
How High Will Wheat Prices Rally?
So after the chart breakout how high will wheat prices rally?
He says, “I think as long as we continue to have this little bit of a problem and until we can get, you know, up in the spring wheat country and get planters rolling, I think we could see another 35 to possibly 75 cents push out of this. You know, we also see that, you know, USDA, we’re at USDA’s export projections. So exports are going to have to increase in the next report, which that’ll add a little bit of friendliness to it as well.”
Corn Follows Wheat Adds Risk Premium
Martinson says corn was also higher and made new highs for the move following the wheat complex but it was also adding risk premium.
“I mean, you know, the geopolitical, because of the straight staying closed, the fertilizer not getting to the U.S., you know, there’s still land changing hands and a lot of the new land that, you know, the producer doesn’t have fertilizer booked for isn’t going to go to corn. So we’re
looking at less corn acres being planted. There’s talk of even guys trying to tighten up their supplier, you know, spread it over more acres. It looks like corn acres will see a little suffer for that,” he explains.
He says this week’s weather also looks like it is going to slow down planting in the Corn Belt.
“And I think that added a little bit of support as well.”
How Far Will Corn Acres Fall?
The corn market is anticipating acres and production to fall due to the fertilizer crunch and higher prices, plus weather.
“I wouldn’t be surprised to see, you know, I’ve been expecting corn to be closer to the 93 million acre level. So I expect we could lose close to a million acres of corn.”
Will Dec Corn Hit $5?
December corn is closing in on the March contract highs at $4.98 1/2 but can it make it through that chart area and take out $5.
Martinson is optimistic, “I think we can. I mean, we got plentiful stocks and this could be more of a story for corn later in the season once we see where acres fall and stuff. But I do think that we could get up into a mid $5 area to, you know. maybe encourage producers to plant a little bit more corn than what they were thinking of, try to spend a little bit more on that fertilizer. So I do think we will see this market get above $5.”
Soybeans Fall
Soybeans were not able to extend Monday’s gains or follow higher corn and wheat.
It is a combination of the fear of more acres of soybeans
“I think they’re looking at more acres. And then, you know, we can kind of see that in the rapid planting progress for soybeans. I mean, that’s really been stellar so far this year. And I think that’s adding to the put a little bit of pressure on. I do think there’s a little geopolitical there because not everybody’s convinced that we’re going to see a U.S.-China summit take place here in two weeks.”
The market also saw profit taking after running up to the top side of the trading range it has been in for weeks.
“I mean, yeah, it’s been an extremely tight sideways trend in the soybean market. I do think we have an ability to get above it, but it’s going to take China and the U.S. having that summit meeting, and it’s going to take China saying they’re going to buy some more soybeans from the U.S.” adds Martinson.
Soybeans Await China Meeting
There is a concern for the market tied to the idea that if the Strait of Hormuz is closed and the conflict with Iran continues it could blow up the mid-May meeting and its outcome according to Martinson.
“Iran and China are friends and a lot of China’s energy comes from Iran. So the fact that the Strait stays closed and we’re putting a blockade on any oil vessels, crude oil vessels coming out of Iran, that is causing some concerns and raising a little bit of tensions with China.”
$100 Crude Oil Supports Bean Oil
On the flip side, the $100 crude oil market is supporting the bean oil rally.
Martinson says, “It is helping bean oil, and it is encouraging a little bit more of our, maybe our biofuels industry to continue to expand.”
Meal Reacts to EU Canceling Argentine Soybean Meal
The soybean meal market was higher on Monday on the news that Argentina soybean meal was rejected by the European Union due to the detection of an unapproved GMO trait.
So will the U.S. see any sales as a result?
“I think we will get some, but I think the market was disappointed. We didn’t see anything sooner than, you know, of course, it was tough to get, you know, something right away. But I think the market set back a little today off of the concerns that we didn’t see any repurchasing
from the European Union. But I do think we will be able to get into that market and sell a little bit more, especially if this GMO trait continues to be showing up in the Argentina beans,” he says.
Live Cattle Hit Record Highs Again
Live cattle futures soared again on Tuesday and nearby contracts made record highs.
It was a combination of technical buying but also cash bids from packers at $250, which is higher than last week and those bids were being offered already on a Tuesday.
Martinson says that pushed the futures, “I mean, you know, right now cash is, I mean, cash has been king for quite a while and that’s what’s been continuing to drive both the live cattle and the feeder cattle market. You know, supplies continue to be tight. We’re not seeing that change any and it’s unlikely we’re going to see any border opening because of the large increase in cases of screw worm up in Mexico. So I do think that, you know, cash continues to be the king and that continues to what’s main driver of this market.”
Feeder Cattle Also Testing Highs
The feeder cattle futures were also testing the highs.
Martinson says the cash feeder market has been strong on tight supplies, “I mean, a lot of that crop has been moved now so that supplies are going to continue to tighten up. That, I think, will keep that price a little bit strong. It’s going to be interesting to see where all this settles out, but I wouldn’t be surprised to see this market continue to hold until the fall calves start coming in.”
And drought in cattle areas is going to result in more cattle coming to market early because they have no grass.
“You’re starting to see those western regions, you know, rain being pulled out of the forecast. Getting a little tougher for them to get rain. And they’re seeing the wildfires that we saw earlier, especially in Nebraska earlier this spring. So there is a lot of concern about being able to hold the cattle,” he adds.
