The Perils of Farming
Old MacDonald had a farm, until record-breaking heat waves, a trade war, and floods destroyed all his acreage! Farmers can’t catch a break as Mother Nature puts American farmland under the cosh again, and her effects are rippling into the stock market.
It’s the fields of Nebraska, Illinois, and Iowa that have it worst. Arlan Suderman, a commodities economist, believes floods have made crops less durable. With high temperatures forecast, that leaves farmers sat on the sidelines, unable to plant more crops and fearing for those already in the soil.
Add a trade war to the mix, and the US Department of Agriculture projects the lowest corn crop yield in 4 years. That’s woken up commodities markets because if the wheat supply dries up, its scarcity will demand a higher market price as hungry Americans bang their forks on the table. Some investors will try and make plays on this, buying futures of wheat and oilseeds on a commodities exchange.
There’s also a second, third, and fourth-order of effects from this farming fright. Railroads won’t enjoy as much corn to carry, and retail outlets will be forced into higher prices by suppliers. However, like gardeners, farmers believe that what goes down must come up. They say you have to be an optimist to be in farming, but the same certainly doesn’t apply in investing. Corn ended last week five and a half percent lower, and by all accounts from the field, things are not looking much rosier for this week. Still, the rest of the market plows on!