Hard Decisions
There are no lazy summer days for ranchers and farmers. On one side of their businesses, of course, is the hard work – managing crops and livestock.
Then, on the other side, the one that keeps them up at night, is the decision making around marketing the crops and livestock and planning for the future, both of which require a lot of thought and occupy most of the summer.
As a commodity, the price of both crops and livestock changes by the hour. It takes many hours of reading to keep abreast of daily prices and trends. What to some may be a nuisance, ag news is information and education to a rancher or farmer.
Recently, the U.S. Department of Agriculture (USDA) released a June acreage report which was full of surprises for many farmers. The report told of a spike in planted corn acres and a large reduction in planted soybean acres.
Between the report and rains – or lack thereof across the Corn Belt – the market had a lot of news to digest on the Friday the report was released. But, analysts called the report a “game changer” for soybeans
According to the USDA, farmers made a huge cut to their intended soybean acreage. The USDA’s June Acreage Report shows farmers planted 83.5 million acres of soybeans, a large reduction from the 87.5 million-acre intention in March. This made 2023 planted acreage for soybeans five percent below last year.
The other surprise was USDA said farmers planted 94.1 million acres of corn in 2023, which is up from the 91.9 million acres in the Prospective Plantings Report in March. The 94.1 million acres planted is six percent higher than what farmers planted in 2022.
“It’s an absolute game changer in regard to the soybean balance sheets,” explains Joe Vaclavik of Standard Grain. “What this means is it gives us very little room for error in regard to yield and production given this lower acreage number.”
“And, on the flip side, we saw a higher corn acreage number that went up to 94.1 from 92, even in March. So, it was a big divergence in the markets sell off in corn on a higher acreage number and a sharp rally in soybeans on a drastically lower acreage number,” he adds.
When one takes the number of planted corn and soybean acres, then looks at the bushels of corn and soybeans stocks – what is in storage from last year – the true picture comes to light. Then, one has to look at global acres planted or harvested, the weather and other environmental factors, and a price will come out of that.
Farmers are not rolling the dice, but it may seem this way.
Considering livestock prices, which are also a global commodity, are governed by numbers of live cattle, sheep or hogs, worldwide demand and drought.
Cattle numbers seem to fit into a cycle which runs around 10 years, where historically, only two years out of this timespan offer tight feeder and cull cattle supplies. We are in one of those two years now.
These tight supplies allow better prices for cow/calf producers and feeders. But, higher input prices will erase profits, similar to what is happening now. They are buying inputs at retail value and selling their livestock at wholesale value.
Out of all of this, we hope, comes food security.
