King corn reigns again while oil sinks
Corn rallied 35 cents per bushel this week as investors realized its price is virtually immune to tariff wars. Unlike other agricultural and financial markets, the U.S. is the largest producer in the world but also the largest consumer, making import and export issues relatively mute. While input costs like fertilizer, labor and land have increased, so has demand for feeding the young cattle and poultry population as we try to replace shrinking herds and flocks. Corn is the basic feedstock for ethanol plants, which now produce a major and growing portion of our fuel for cars and trucks.
In contrast to corn, the commodity king, petroleum, has had a crude awakening. Worldwide, more dollars worth of petroleum are traded than almost all of the commodities combined. Fears of recession and threats of increased production targets from OPEC have worsened the price drop. April first prices stood at $72 per barrel but dropped to $55 by the middle of this week. Pumping and distribution networks make crude a nearly perfect subject for tariff wars and disruptions.
Chinese and U.S. commodities: Who gets what?
With U.S. tariffs on Chinese goods up to 145% by Thursday and Chinese retaliation in place, many are wondering what specific commodities are affected.
China is the third largest importer of U.S. products behind Canada and Mexico. The U.S. shipped $145 billion worth of goods to China in 2024. Top exports include soybeans and wheat. Additionally, oil and gas, largely from Texas and Louisiana, move to the Chinese. Other exports include pharmaceutical products, medicines, semiconductors and components, aerospace products, chemicals and motor vehicles.
Meanwhile, top U.S. imports from China include electronic machinery, TV parts, nuclear reactor parts, mechanical appliances, toys and games, sports equipment and plastics. Total imports from China ring up a price of $438 billion. The U.S. 2024 trade deficit with China stood at $295 billion. Analysts worry that China trade issues will lead to recession and a realignment of world trade partners moving forward.
Big farms harvest largest federal assistance
The good news for farming is that the federal government continues to supply financial assistance. Large farms, especially growers of corn, soybeans and wheat, receive 70% of federal subsidies. In the past 25 years, the top 10% of large farms received 79% of subsidies. The top 1% of large farms got 27% of total subsidies from 1995 through 2021. Far less assistance is available for livestock, fruit and vegetable producers. The top 10% of large farms receive $29 per acre in crop insurance while all farms average $12 per acre. Producers of local food have faced $1 billion in cuts to the Local Food Purchase assistance and Local Food for Schools programs. If assistance for the small, local farmer could match percentages offered to large farms, all agriculture producers might thrive.
CME midday prices: Price per bushel: July Soybeans, $10.51; July Corn, $4.95; July Wheat, $5.70. April Livestock per 100 pounds: Cattle, $202.00; Hogs, $85.50. Metals per troy ounce: June Gold, $3,248; May Silver, $31.95. May Copper per pound: $4.52. May Crude oil per barrel: $60.80. The June S&P futures contract is trading at 5365.00.
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