An important part of this article is the date, April 1, 2020. The overarching trend with all commodities is volatile, rapidly changing, and quick to react. The backbone of this is the uncertainty of many items. With no clear social or economic recovery period, we are still moving day to day. One thing that we can do is spend time looking at the cost efficiency of our operations and preparing for a planting season or calf marketing period that will happen regardless of things outside the farm or ranch.

Corn

A couple issues are weighing on our corn markets. The fall contracts are off about $0.50 from the start of the calendar year. One of the major influencers is the ethanol market. About 40 percent of our corn crop is used in ethanol/fuel production. The ethanol industry has taken hits recently. The oil dispute caused gas prices to fall caused a dip in ethanol prices. Now, the reduced fuel demand from Covid19 restrictions has been more than a glancing blow.

The prospective plantings report for corn came in at just under 97 million acres. This was higher than industry estimates. This would be a higher number than the past couple years, again to the bearish side.

Soybeans

Soybeans have been stronger in terms of the futures contracts over the past couple weeks. From a more long-term look, prices are still low. Remember that before the Covid19 ordeal, we were looking at trade agreements with China. Keep in mind that we export roughly half of the US soybean crop. An avenue to higher soybean prices will be the fulfillment of trades to China. On the other hand, the most current planting expectations are up which has a bearish tone. As we proceed into the planting season, keep an eye on the relationship between corn and soybean planted acreage.

Cattle & Beef

Boxed beef has finally slid lower after some big demand taking place to replenish the beef cases at the grocery stores. Fat cattle cash trade is moving in the $120/cwt. range but the out-front futures are sub $100/cwt. Out-fronts are lower in part to concerns over the general economic issues discussed below. Calves have been resilient but hard to capture good numbers due to limited trade. Still, this week’s calves in the 400-600 pound range are off $10-20/cwt. since the start of the year. Not bad, considering the other sectors of the cattle trade. A silver lining is that spring green up is upon us and feed prices read low in 2020.

General Economy

Unemployment is creating big waves economically. Last week’s unemployment claims were record high. For perspective, 5 times higher than recorded in a week in the past several decades. Consumer income is vital for almost everything, specifically when it comes to beef demand. Keep an eye on employment numbers. The faster the masses are back to work, the better off our economy is.

(Scott Clawson is the northeast area ag economics specialist for Oklahoma State University Extension.)

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