The lack of progress with corn planting in the Corn Belt states has people nervous. However, we are still early in the process and with May 10th being the widely accepted ideal planting date, we could still see the vast majority of planting occur close to on-time.
Planting dates are just one element of larger weather concerns moving forward, but if we are still having this discussion in late May, it will be increasingly difficult to hit or exceed trendline yield estimates. However, the good times of recent years have allowed farmers to invest substantially in upgrading their equipment. Planters are ready, and the American farmer will hit the fields with the most modern and newest equipment inventory ever.
Meanwhile, while farmers itch to get into the fields, the market is trying to sort out all the conflicting signals it’s getting, with corn and grain in a rally while fed and feeder prices disappoint. Ag markets have been characterized by extreme volatility that sometimes seems to be completely disconnected from market fundamentals, but ultimately the markets still are doing a tremendous job of price discovery. Fear and greed may rule in the short term, but fundamentals always will have the ultimate say.
Volatility will likely decrease as the cattle market becomes more accustomed to the new rules of the game—tighter supplies, higher feed costs, and more risk.
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