Markets are rational and amid all the uncertainty the current bearishness is reasonable. There are also fundamental reasons for the current selloff. It makes no sense for U.S. farmers to plant 97 million acres of corn. We think China will become a larger purchaser of U.S. soybeans in a few months, but there is limited certainty. Brazil’s soybean production area is forecast to increase in 2020/21 by almost 5 percent. Some countries have stockpiled food grains and that will lag some future demand. Farmers are having to dump milk and there is the threat of some reaching the point of shooting their cattle. Meanwhile, the strong dollar is aiding competitors. And if all of that isn’t dreary enough, the market hasn’t yet hit its...
From WPI Consulting
Forecasting developments in production agriculture
On behalf of a private U.S. agricultural technology provider, WPI’s team generated an econometric model to forecast the movement of concentrated corn production north and west from the traditional U.S. Corn Belt. WPI’s model has subsequently provided quantitative support to a multi-million-dollar investment into short-season corn variety development. WPI’s methodology included a series of interviews with regional grain elevators and seed consultants. Emphasizing outreach and communication with stakeholders who possess intimate sectoral knowledge – on-the-ground insights – is a regular component of WPI’s methodologies, made possible by WPI’s ever-growing network of industry contacts.