Winter weather impacts ag everywhere
This week’s winter weather is certainly impacting agriculture all over the country.
Livestock is under significant stress with temperatures falling below zero recently in the Plains down to the Texas panhandle in feedlot country. Also, around 30 percent of the hard red winter wheat crop mostly in Kansas and surrounding areas was vulnerable to freeze damage.
“Transportation is a problem now, trying to move feed for livestock or trying to move grain around,” said Arlan Suderman, Chief Commodities Economist for StoneX.
Fortunately, temperatures across the country are expected to start moderating.
Money has been flowing into the equities and commodities to start the holiday shortened trading week following the President’s Day holiday. Commodity inflation is the talk.
“There is fundamental support beneath these markets but the tremendous presence of money and money supply in the U.S. economy has jumped 70 percent over the past year,” Suderman told The Central Illinois Farm Network.
This is largely due to all of the fiscal and monetary policy. That money is flowing into the markets to a great extent. People have been paying off their debts and trying to save the money but they don’t get much of a return from just government securities.
The money is either being traded on apps which allow free trading or put into investment funds that trade these markets.
“It is finding its way into the markets and that changes how the market manages supply and demand.”
Fundamentals suggest we could see strength for some time – especially in soybeans. The balance sheet for the 2021-22 marketing year, which does not start until September, looks tight and probably will remain that way because of strong demand in China and elsewhere in the world.
Suderman feels the margin for error is very small with corn. We have to wait and see how things play out with the South American harvest as we start looking ahead to the Midwestern growing season. Wheat is in a similar situation.
“We have a lot of wheat in the world but half of it is sitting in China in their storage facilities and losing quality,” said Suderman.
Russia’s winter wheat belt is experiencing some questionable growing conditions and now with the cold outbreak threatening the U.S. supply, wheat traders must take notice.