The effects of the recent Midwest flooding are severe and are yet to be fully known. In fact, the disaster is of a scale that is seldom seen in the modern U.S. The lack of fresh news has put a bit of pressure on grains recently but that could change quickly if even more damage is seen.
Spring wheat recently traded at the lowest level in nine months as concerns over flooding eased. According to Agriculture.com, recent weather forecasts were behind the change in sentiment causing prices to decline.
Concerns over planting delays in the Midwest have kept a floor under corn prices in recent weeks. That market support has been counterbalanced, however, by significant supplies keeping any upside rallies limited.
Soybeans recently rallied from a three-month low but have in recent days come under pressure as some take profits.
Even if prices move sharply higher from current levels, the damage for many farmers has already been done. According to Freightwaves.com, millions of bushels of grain in storage were destroyed in last month’s historic floods and under current U.S. law and disaster aid programs there is no method for farmers to be compensated for those stocks.
The flooding has also had a significant impact on livestock markets. According to the High Plains Journal, the amount of lost cattle is expected to be “significant.” Recent estimates have put the economic damage at some $400 million. Making matters even worse, farmers and ranchers are having trouble quantifying the total damage due to ongoing high-water. The final toll on livestock may not be known for several months and could still have a strong impact on prices.
A recent article from Drovers.com quoted its editor, Greg Henderson, as stating: If you use the $400 million and just equivalent that out to fed cattle, that would be 228,000 fed cattle lost.
Cattle prices have seen some significant volatility in recent action and prices have come under pressure. March tends to see soft demand for beef which can lead to lower prices in the finished cattle market. Demand has a further tendency to pick up in April as warmer weather and the grilling season approaches. If demand does not start to increase in the coming weeks, prices could potentially see further declines.
Some Good News for Producers
Nebraska producers who lost livestock during the period of cold and higher-than-normal rain during the months of January, February and March may now be eligible for assistance from the Livestock Indemnity Program. The payment rate is reportedly based on 75% of the average fair market value of the livestock.
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