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Breitinger commodities column: Grain acres slashed; cattle market slaughtered


Alex Breitinger, For USA TODAY NETWORK-Wisconsin
Published 6:12 p.m. CT March 30, 2018 | Updated 7:56 p.m. CT March 30, 2018

U.S. farmers are cutting back on corn and soybean acreage this year, according to the U.S. Department of Agriculture’s annual Prospective Plantings report.

Disappointed by low prices, farmers are projected to reduce corn acreage by almost 2 million acres and soybeans by over 3 million acres, a move that could reduce production by almost 3 percent for those crops.

Most market watchers had been expecting a small decline in corn acreage and a moderate increase in soybean acreage, so this report caught many people off guard. 

In response to the significantly lower projected production, soybeans exploded and dragged the rest of the grain markets higher. The value for this fall’s soybean crop, represented by the November futures contract, reached a contract high of $10.49 on Thursday afternoon. Meanwhile, December corn rose to $4.11 per bushel, nearing a seven-month high.

Some farmers planned to shift their acreage to more-lucrative cotton or spring wheat crops, but these last-minute rallies may encourage them to review the profitability of planting soybeans instead next month.

Cattle market slaughtered

Cattle prices stumbled to a five-month low on Thursday ahead of the Easter holiday, collapsing in the wake of the USDA report.

Sharply higher grain prices will cut into ranchers’ profits, with many looking at losses on their current herds. This created a panic sell-off with many of the contracts falling to “limit down,” the maximum daily decline.

While these prices are devastating for cattlemen, the recent drop is providing bargains for meatpackers, investors and consumers, all of whom can swoop in and benefit from low prices.

Tech stocks on rollercoaster

The technology-heavy NASDAQ stock index futures had another wild week, with a rapid rise and fall as investors chased headlines all week.

Ongoing scrutiny of social media’s use of data, especially Facebook, had investors on edge, a fatal crash of a self-driving car spooked investors in Tesla, and a suggestion from President Trump that Amazon was undertaxed scared that stock’s owners. 

Meanwhile, a strong U.S. economy emboldened buyers as news broke that U.S. unemployment claims fell to a 45-year low.

For many investors, following stock indexes, like the NASDAQ, Dow Jones, or S&P 500, is easier than following individual stocks, which makes them some of the most popular futures contracts traded, allowing investors to easily move in and out of the market without affecting carefully-constructed stock portfolios.

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