Wheat, soybeans make ground as cattle prices slide Friday

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There have been few opportunities for wheat to shine in recent years, but the double whammy of war and weather continued to give the grain a boost this week.

Randy Martinson, president of Martinson Ag Risk Management, confirmed that the volatility led to a double-digit gain during the week. He shared the update with Jamie Dickerman of the Red River Farm Network on Friday, July 17, during the Agweek Market Wrap.

Ongoing weather concerns, particularly hot and dry conditions, are impacting wheat production and logistics.

On top of that, the conflict between Ukraine and Russia has escalated, with drone attacks targeting major shipping sites, according to Martinson.

“And that is, you know, that’s the breadbasket of the world,” Martinson said. “A lot of the wheat is raised, a lot of the wheat is exported out of that Black Sea region. So that really did set up to help support the wheat market.”

The ongoing conflict with Iran is also frustrating the flow of goods through the Strait of Hormuz.

Another grain seeing some positive movement this week is soybeans. Dickerman said that especially on Friday, soybean prices were higher, partially because of the purchases coming out of China.

Martinson said both China and Mexico coming in and buying were a welcome surprise.

“So we are finding demand, and you know what’s interesting is soybeans are back up close to their May highs, so they’re buying these at higher prices,” Martinson said. “So that’s kind of encouraging, but it does show that we’ve got demand back into the marketplace, and things are looking a little bit better on the demand side for soybeans.”

Cattle slip

While grains have made some gains, cattle are on the downswing, according to Dickerman.

Martinson confirmed that cattle prices, August live cattle, have been lower for 15 straight sessions.

“So it’s been pretty brutal,” Martinson said. “Feeder cattle down 12 of the last 13. So yeah, we’ve seen some pretty good losses in those markets.”

But the losses are not related to the fundamentals. The supplies are still tight, demand is still strong, and there remains decent cash trade.

“The problem is, of course, is that the funds are liquidating their positions on the expectation that we’re going to see some issues with the economy and the possibility of raising interest rates,” Martinson said.

He added that it’s a waiting game for now, because fundamentally the market should remain strong and should make a return closer to record prices.

He suggested that the next Cattle on Feed report could offer enough assurance to bring the market positive again.

In the coming week, Martinson said, focus will remain on weather. The high heat should taper off for a bit, but if it’s not followed by some rain, crops will start to feel the stress of these hot and dry conditions across the northern Plains.

(The Agweek Market Wrap is sponsored by Gateway Building Systems.)]]>