'Important week' for planting coming up in the northern Plains and cattle market continues to shine
Randy Koenen of Red River Farm Network and Randy Martinson of Martinson Ag Risk Management discuss weather's impact on planting, exports and the hot cattle market on the Agweek Market Wrap.
If farmers in Minnesota, North Dakota and South Dakota are going to increase corn and soybean acres as much as the U.S. Department of Agriculture thinks, the weather in the coming week will have to cooperate, Randy Martinson of Martinson Ag Risk Management said on the Agweek Market Wrap.
"This is going to be a very important week for planting progress in the northern Plains," he told Randy Koenen of the Red River Farm Network.
The March 31 Prospective Plantings report showed big increases in corn acreage in the three states, and a smaller increase in soybean acreage. Martinson said warmer temperatures and rapid snowmelt this week have made those increases more possible.
"I haven't seen the amount of water that I was expecting in the fields," Koenen said.
Martinson agreed, saying in travels across North Dakota, rivers and sloughs are not filling up despite the water.
"I think we're seeing the ground take a lot of the moisture," he said.
Koenen pointed out that if the warmup continues, planting could get started sooner than had been anticipated. But Martinson said the upcoming forecast will tell the story; next week's forecast is showing cooler than normal temperatures and more moisture, "possibly even — I hate to say it — snow in the forecast." Without cooler weather and more moisture, mid-May might have been a possibility for planting. If the forecast comes through, it could be the third week of May, Martinson said.
Koenen said last year, many farmers didn't get in the fields until the first of June and still had decent crops.
"That is helping to alleviate some of the anxiety about this year's planting season," Martinson said. "It will be interesting to see just how this spring stacks up."
Spring wheat, typically one of the earliest planted crops in the region, will need to "buy some acres" by increasing in price, Martinson said. Otherwise, there won't be much incentive for farmers to try to get it planted given the conditions.
"That market does need to come to the table and try to participate" to hold onto anticipated acreage, he said.
He expects the Monday Crop Progress report to show continuing problems with the winter wheat crop, already the lowest rated on record.
While the weather in the longer term remains concerning, Martinson said it was a negative factor in the markets this week as conditions improved both in the northern tier and in the Corn Belt. Also a negative for the markets this week was the World Agricultural Supply and Demand Estimates report, which didn't lower stocks for corn and soybeans as had been expected by many market analysts.
There were encouraging signs for the week, Koenen said, including China buying both new and old crop corn this week. Martinson said that shows that the U.S. corn price now is low enough to get China into the market, but it also shows the continuing concerns about crops in South America, where drought continues to reduce expectations. China must be concerned about the safrinha — or second harvest — corn crop there, he said.
"China wouldn't be buying if they thought they could get that product someplace else," he said.
Despite expectations for big crops of corn and soybeans in Argentina and Brazil, Martinson said the corn crop will end up being smaller than last year's and the soybean crop is only expected to be 2 million to 3 million metric tons ahead of last year.
The cattle market continues to be a bright spot.
"Cattle cattle, just on fire," Koenen said, while noting that the futures market hasn't been able to keep up.
"Cash has made some tremendous jumps in the last three weeks," Martinson agreed.
He said packers were short on cattle in March after storms and needed to bid up to get supply, then were short again after the Good Friday holiday.
With cash cattle setting all-time contract highs, Koenen said the concern is whether demand can hold up or consumers will tire of high prices and choose other proteins.
"That's going to be the concern," Martinson said. "Pork right now continues to be a little on the cheap side, and chicken is a little cheaper."
However, he said economic indicators of inflation easing are supportive, as is an early indication that the Federal Reserve may not hike interest rates in May. Koenen and Martinson said the economy needs to stay strong, without a lot of layoffs, to help beef demand.
(The Agweek Market Wrap is sponsored by Gateway Building Systems.)