Decreased Incomes May Make it Difficult for Farmers to Hold Back Supply: Grain & Livestock Futures

Grain and livestock futures may find even lower prices ahead as falling incomes here in the US may make it difficult for producers to retain much of their stocks in order to await grain & livestock prices to recover from these current low levels. Grain futures are anywhere between “unchanged” to down .06 cents trading today at the Chicago Board of Trade.

The USDA stated last month that due to weaker crop and livestock prices, domestic farm incomes are expected to drop this year to a 13-year low. If that’s not enough, our strong US Dollar and plentiful global supplies have also dragged down world food prices – reportedly 18% lower prices than last year at this time.

Farmers and ranchers usually hold back a percentage of their supply when commodity (futures) prices are low as we have seen lately,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, sharing his fundamental assessment of the grain futures market. Craney added, When you take into account, however, the incomes of producers which are expected to be limited, it may be difficult for them to hold back from selling to get all they can to pay their bills.”

Grain and livestock futures trends are mainly down (only soybean futures have turned up recently) with no bottom yet in sight. Grain & livestock futures can see technical rallies in markets like this, but with incomes down across the land, prices for consumers should continue to fall at the grocery stores.

ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.