Market Analysis with Sue Martin

[Yeager] Improving weather in the Plains took out some of the rally in the grains before a couple of export sales offered some support for the week ending February 27th. The nearby wheat contract added $0.11 in the May. Corn contract gained $0.09. Biofuels obligations from EPA moved across the street for review, providing a boost to the soy complex. The May soybean contract improved by $0.18, while May meal strengthened by six. 70 per ton. May cotton expanded by $0.06 per hundredweight over in the dairy parlor. April class three milk futures lost a penny. The livestock market was mixed. April cattle sold off nine. 77. April Feeders cut 13. 85 and the April Lean hog contract gained $2.05. In the currency markets, U.S. Dollar Index weakened by 12 ticks. April crude oil found $0.58 per barrel. Comex gold increased one. $69.90 per ounce, and the Goldman Sachs Commodity Index was up by more than 11 points to settle at six 1040. Here, now, to lend us her insight on these and other trends is regular market analyst Sue Martin. Hello, Sue.

[Sue Martin] Hi there.

[Yeager] Since we since I wrote that story, the intro to wheat, a major thing has changed. Just in those moments. Global tensions again have risen to the top of the big story in wheat. What is going on?

[Martin] Well, it's all centered around Iran. We ended the week with disappointing talks with Iran, but we'll have more talks next week. However, I think we're putting the groundwork in for the just in case. This past week on, I think it was Wednesday, the U.S. moved. I think it was 11. There was 12 to begin with. F-22s into the airfield or whatever base in southern Israel. One of them had to turn around and go back because of mechanical issues. So, 11 made it. Also, there's the international airport at Baghdad stopped allowing people to come into the airport. And then we've pulled our people out of the embassy in both Iran and in Israel, but also other countries around the world are pulling their people out of the embassies. So, it's.

[Yeager] It's a serious thing in a hurry. And so that puts the stress on with Russia and Ukraine. We've had that deal. So, we're if I'm a producer watching these stories, regardless of what it is, am I taking some type of position right now?

[Martin] I think we got further to go. I think you will see wheat trade at $6 and it's not super far away. And in the meantime, if war did break out, wheat is a very it's a food item. It's very important. And you might be seeing countries around the world all of a sudden getting protectionist thinking. You know, maybe we need to get some wheat in our coffers to have food on hand.

[Yeager] Well, Japan's going to have some U.S. corn coming to it after some export sales this week. What else is impacting corn?

[Martin] Well, I thought it was interesting because today on Friday, we had foreign ag service report a sale of 275,000 metric tons of corn to unknown destinations. Now we've been having off and on sales going to unknown destinations. Of course, I tend to be an optimist, but I think that's Chinese. China needs corn, and as of the latter part of December through the month of January into February, China had bought triple the amount of sorghum from the U.S. that they did. The whole marketing or calendar year last year. And so, I you know, their weather was horrific, both in corn and wheat country. They started off very dry and then ended up in floods. And so bad that the government stepped in to help farmers get the crops out. So, the quality isn't there. In the meantime, the hog production hasn't slowed down in China much to the dislike of the government. It's increased. And so, the price of pork in China, they compare it to the price of tomatoes second lowest on record. And so, you know, there just is a need for corn. But also, there's a need for soymeal. Now China doesn't tend to import soymeal. But on Friday they made an agreement and it started back in January. But they lowered the tariffs down I think 85% on canola. And of course, canola meal. I thought that was interesting. Taking canola meal because they tend to like to crush their own soybeans. And so, they are importing beans. Of course, we know they're huge buyers. This week out of Brazil. One thing that's interesting in Brazil is that the dollar to the real to the dollar relationship has gotten very narrow. 5.2 I think it is to one, which means that the farmer is not happy about that. He sells his beans in dollars and therefore he's not getting as many dollars for his beans. And he buys his inputs in reals. Well, when they're going into harvest, they don't need inputs. They need money to pay for the beans. So, they're not selling beans right now. They're being very slow to move forward.

[Yeager] Which creates an opportunity then for the U.S. I mean, we had a couple of questions about China. People like, well, should we even rely on them. But the U.S. government is possibly providing some cover for sales with this Renewable Volume Obligations language that's come across to OMB. Are you how bullish are you on beans right now, Sue?

[Martin] Well, you know, my long-term charts are looking very friendly. And the potential is still yet to come. It's real important because quarterly data it's we're so far we're inside the range of the last quarter of last year. But we're narrowing in even on Friday we closed right at the highs up $0.10 and not very far from the highs of December. So, we're probably 6 to $0.08 away from that high. If you're talking a lead contract, if you look at the March contract specific, that high was 11 72.5, but very easily to be struck this next week. You take those highs out, then you're starting to move this market out of that inside range for the quarter. And of course, it's real important how we close at the end of the quarter, which also coincides with the meeting between President Trump and President XI. Now, I know that the South China morning post trade send a kind of a downplay message.

[Yeager] That's the one with no agenda. There's not been too many talks between the two countries.

[Martin] Yes. And to be honest with you, what I see it as is propaganda trying to get the prices lower so they can come in and buy beans because I think they will fully buy the beans from the U.S. Now we have to keep in mind. Yes, China is going to buy beans from Brazil, but those beans will probably be going to privates, not state-owned enterprises like Kafka and Single Grain. And so, I, I believe China will buy those beans and the funds keep adding in to their positions for beans as well. But it's interesting because every time we get a break, it's like the market gets quiet and then next thing you know, it's floating right back up. And of course, that old saying, never sell a quiet market or kick a sleeping dog. They both bite. I think we'll see $12 plus beans. In fact, I think new crop beans will see $12 plus. And then if we have an occurrence of weather that coincides, then we're going to have something even more dynamic. Maybe beans go to 13, possibly higher.

[Yeager] And that could impact both beans and corn on the weather side. And that's a weather story I do want to get to in Market Plus. I need to quickly just mention this cotton market and why all of a sudden this thing is having life?

[Martin] Well, it's interesting because Cotton Acres, which beans will pull some of those acres. Cotton acres are expected to be down in the U.S., down in Australia, down in India. And of course, China is cutting back on Cotton Acres as well. And Brazil's you know, they they've been gaining in cotton acres because they come in behind the beans. And so, it's interesting because we're looking at what could be about 40% reduction in acres. And then in the meantime, the biggie is the funds are heavy, heavy, almost record short. They're like 121,524 contracts or something close to that. On the short side, a week ago, I haven't seen, of course, the commitment of traders report to end this week, but that should help spin the market higher as well. I'm friendly cotton.

[Yeager] Well, nobody seems to be too friendly cattle or feeders this week. A big sell off. Is this just profit taking or is there more to it?

[Martin] No, I think actually the market we had cycle window timing on Thursday and the market rallied two days before that into it into Wednesday, which I would have rather seen the market go down and then see the prices go back higher. The indicators I follow on the daily are so low, and they've been that way since about, I want to say, the 28th or so of January. And they're just I need to be patient and let them turn and prove that they're going to go positive. But I've been a chicken to sell because of it. And I even pulled shorts to quick on Wednesdays or Thursdays break. And I should have waited another day. Well, we made higher highs in February and we've closed the month lower. That means you're going to see another push lower in March, and then we'll see what we're made of. But what's interesting is on Elliott Wave charts, we're pushing down towards a wave for a large wave for there's two of them. And then here's a high at new highs at a five. I'm wondering, is it possible we still see higher highs yet this year? It's going to be interesting because feeders haven't been able to fulfill that finish that gap. While fats did make higher highs. But the February's expired here on Friday, $12 higher than the April Fats. That's huge. And a huge spread. Cash ended up down $3 or well, 2 to $4 this week. And of course, the cutout kind of fizzled out because they think that it was catching buying because of the Greeley, Colorado auction or.

[Yeager] The strike, a potential strike which will have to pick up, as always, our time flies. Thank you Sue.

[Martin] I could talk forever.

[Yeager] I know, and we'll get you in a minute here in Market Plus because you've been watching the analysis portion of this program. We'll continue here in our online only segment. Find it by searching Market Plus with Sue Martin. Wherever that you get your podcasts. And you can go to our website at Markettomarket.org as well to listen. We've been on X so long, we started as a Twitter account. Join us at Market to Market to see our postings. Next week we are going to give you the story of building an agriculture program, feeding a changing local community. Thank you so much for watching. Have a great week!

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