Thursday’s USDA March U.S. acreage and stocks report enlightens us in many ways.
First of all, the acreage intentions of corn, meaning what farmers are going to plant this spring, came in at more than 92 million acres. That would be the second largest since World War II, if the “intentions” put forth today materialize.
The importance of this report, though, was that the inventory of corn — about 6.52 billion bushels — is 15 percent less than one year ago, at a time when demand is strong. Yet, the lesson here is bigger than just agriculture. Corn prices opened 30 cents higher, the maximum limit for the session. At the same time we saw Treasury yields climbing.
No one wants higher agricultural prices. These prices feed inflationary forces and many in the world who are less fortunate have to dig deep to feed their families. But the realities of the market place sometimes are harsh. The commodity markets are, in essence, rationing a scarce commodity, by driving prices higher and higher.
Governments, of course, can try to give assistance to those in need in less developed countries, but the market really is doing the unpleasant task here.
Yet, there are also unpleasantries in the financial markets, from the hangover of cheap credit.