USDA crop outlook shows more corn acres in 2019
The U.S. Department of Agriculture released its outlook for the coming year last week, showing a drastic swing for U.S. farmers away from planting soybeans towards corn. Many Midwestern farmers make an annual decision between the two crops, gauging weather, soil conditions, and profitability to help determine their mix of acreage.
This year, farmers may plant 4 million fewer acres of soybeans, while adding nearly 3 million acres of corn. The primary reason for the switch has been the ongoing trade dispute with China, which caused that nation to nearly cease buying U.S. soybeans during the last year, compared to normal years where China buys one third of U.S. beans.
Even if this year’s corn crop is bigger, the USDA is projecting that corn demand will rise faster. In its newest estimates, the USDA expects stockpiles of corn, wheat, and soybeans all to be smaller next year, which could help prices to rebound.
As of midday Friday, March corn was worth $3.76 per bushel, while soybeans and Kansas City wheat traded for $9.13 and $4.60, respectively.
Oil Blows up on OPEC Cuts: Crude oil soared to $57 per barrel as Saudi Arabia, Russia, and other major oil producing countries agreed to reduce production by more than a million barrels per day for the next six months.
Trade negotiations with China also fueled the rally as hopes for a resolution could create more demand from that country.
Meat Markets Diverge: Cattle prices continued higher this week, reaching a one-year high, even as hogs dropped to a six-month low.
Beef has been gaining steam as consumer demand has been strong, and a harsh winter in the Great Plains has made it hard for cattle to stay healthy. Meanwhile, U.S. pork is continuing to be bottled up by trade disputes, while the ongoing African swine fever in China is creating a short-term glut of meat and lower demand.
These factors knocked April hog futures under 56 cents per pound this week, while April live cattle garnered $1.28 per pound on Friday, a near-record ratio of the prices.
For carnivorous shoppers, this means that pork chops should be significantly cheaper than steaks, and hot dogs should be on discount compared to hamburgers, creating opportunities for savings at the supermarket.
Alex Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, Kan.