The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
The Hueber Report is a grain marketing advisory service and brokerage firm that places the highest importance on risk management and profitable farming.
Click here for a free trial
Some had come to believe that it was not possible, but indeed, we can see prices trade higher in the grain and soybean market, albeit not much higher at this point. Is this just a moment or two to allow the bears to catch their breath after their successful rout of these markets, akin to sitting in the eye of the hurricane? Or have they now drained the final drops of blood from the last bull carcasses and are headed for another breed in a different pasture? Considering we have pressed prices for many ag markets down to what has developed as levels of value/support, I believe the latter is the case. Even if correct, the problem now is, lacking a risk stimulus, outside of technical corrections, there would seem to little that would sustain rallies.
While I do not mean to rub salt in the wounds, the truly unfortunate part in all of this is that it was unnecessary. Ag is the one of the bright spots in the export economy that keeps the trade balance even remotely in check and has been used as a weapon, directly and indirectly, and as the sacrificial lamb to wage war for other products, both physical and intellectual. Just over the past couple weeks when all the trade tariff rhetoric began to heat up again, the corn market has lost roughly $.40, beans $.90 and wheat around $.45. Using the USDA projected yields this equates to revenue losses of $70 an acre for corn, $44 in beans and $21 per acre in wheat. Taking the computation one step further, combined this works out to be a little over $10 billion of revenue wiped out just on this year’s production. One might be able to argue that the favorable growing conditions are responsible for a portion of the breakdown, but even if you cut the number in half, it is too much, and of course, we have not even considered the impact this has created in the livestock sector over the past couple months. The farm community and farm organizations need that message to be broadcast loud and clear. Who knows, we might even get a thank you note from the steel, aluminum and high-tech industries that are being defended by the administration.
No comments have been posted to this Blog Post