Planting was very late not only in the northern plains, but also in the corn belt. While forecasts for the Corn Belt look likely to improve, parts of the northern plains could experience more moisture over the weekend and into next week. At this week’s Agweek Market Wrap, Red River Farm Network’s Don Wick asked Randy Martinson of Martinson Ag Risk Management what this could mean for acreage.
In the corn belt, Martinson said it would be difficult to see an increase in corn acreage, although that could change if enough planting progress is made in that region. But further north, it looks like spring wheat and corn will struggle to gain acres and may start to lose some.
“At this point, I think we will lose more acres of corn and spring wheat here in the northern plains and western corn belt, simply because it will delay planting so much that growers won’t take not the risk of the potential for lower yields and the fact that we are getting closer to the final planting date in some of those markets as well,” Martinson said.
High commodity prices, especially for corn, could push farmers to plant past the last planting date (which varies by region), Martinson said. But he said a lot will also depend on whether the rain stops and a warm-up starts.
Wick said the Federal Reserve has raised interest rates by half a percentage point and announced similar rules are coming in June and July. Martinson said this is good news for grain markets. In the long term, this could continue to strengthen the dollar, which can generally hurt exports. However, with production issues in Brazil, Martinson doesn’t see that happening right now.
“I think that will overshadow the rise in the dollar,” he said. “The problem with that is that it’s going to hurt meats more than grains.”
Beef, he said, stands to lose out to other proteins as disposable income declines for the average consumer.
“Seventy percent or more of our red meat is eaten in restaurants,” Martinson said. “You get higher gas prices and higher interest rates, people will tend to go out and eat less.”
Wick also spoke about the impact of news from India on the wheat market. Martinson explained that India typically only exports around a million metric tons of wheat a year, making it “a player but…not a big player.” But they were expected to have a huge harvest, which could have filled some of the void left by slowing exports from Ukraine and Russia.
“Well, all of a sudden March has become the hottest month ever in India, and that’s reducing their production. So they were expecting to export about 10 million metric tons of wheat; now it’s fell between 5 and 8 million. So they become less players,” he said.
The news that their harvest will not be as abundant could bring business to the United States. The problem for the United States is that much of the southern plains remains dry. Martinson said Oklahoma may be lucky to have a half crop from last year, and there are reports of a poor “almost Dodge City west” crop in Kansas.
Wick and Martinson also discussed some “outside influences” that could have long-term market implications, including the situation in Ukraine, Europe trying to wean itself off Russian oil, and COVID-related shutdowns in China. Martinson said the lockdown in China was a big concern and he heard it could last until July. This could have considerable effects on the demand for many products.
“Their food intake has dropped because now they can’t even go out to buy food – it’s delivered – which has dramatically changed the diet of the average person in China,” he said.
The US Department of Agriculture will release estimates of global agricultural supply and demand for May on Thursday, May 12. Martinson said the focus will be on what the USDA is doing with the export numbers; he expects wheat exports to be reduced, corn to remain unchanged and soybeans to increase. On the new crop side, he said everyone is watching what the USDA will do with yield expectations given the late plantings. What the USDA will do with the expectations of Ukraine and Russia will also be a big issue.
Heading into the new marketing week, Martinson said the weather in the northern plains will be a big factor.
“If we get the top end of the rains here in the northern plains and slow planting further, that’s going to be a big boost for the wheat and maize markets. This is going to be a drag on soy,” he said. mentioned. “And then look at this report, what the USDA has for the estimates, because this will be like you said, the first baseline look at 2022.”