What happens to farmers when politics drive markets?

I sat around a table with a group of farmers the other night, lamenting markets and slowly making our way through a basket of chips and salsa.

Specifically: the cattle market, which had just plummeted based on President Donald Trump’s plan to import Argentinian beef, and the soybean market, which had just jumped 20 cents on news of Trump’s meeting with China.

“How are we supposed to market when the fundamentals don’t apply anymore?” one farmer asked. 

That’s the million-dollar question.

Gary Schnitkey, longtime University of Illinois ag economist and my favorite sage, believes the fundamentals still apply, but they’re layered with another dimension: government policies. 

Pass the chip basket to Gary.

The administrative state

Schnitkey recalls five times since 2017 that markets have swung wildly due to government policy changes: 

1. the first Trump trade war and resulting payments
2. COVID-19 shutdowns and payments
3. President Joe Biden’s climate policies
4. Trump’s reversal of those policies
5. the second Trump trade war

Whew.

That’s exactly what Schnitkey calls an activist government agenda that’s both hard to predict and not going away anytime soon. Trump has also taught everyone how to use the administrative state, with pen and executive order at the ready. And we have a Congress that’s neutered itself through its members’ desire to remain in power while doing nothing — while also growing very, very old.

And it means priorities don’t just shift every four or eight years. They catapult from one extreme to the other. It’s not hard to imagine an AOC presidency in four years, elected directly in response to the current administration.

Pass the margaritas and good luck marketing around any of this. 

We’re also close to having no traditional farm policy, which is debated by stakeholders and built on compromise and longevity. Congress hasn’t passed a farm bill since 2018 and instead rolled commodity and crop insurance titles into the One Big Beautiful Bill Act. Just this week, they reopened the government and threw the 2018 Farm Bill extension into the same bill. They might update the remaining provisions next year. Maybe.

Today, Schnitkey says the critical parts of farm policy are — you guessed it — administrative:

• the latest ad hoc assistance from the president and Congress
• administration rulings on biodiesel
• myriad EPA proposals

None of this is how a democracy was supposed to work. But it is reality. So how do we sell corn around it?

Markets and margs

Bruce Blythe covers commodity markets for Farm Progress and says the unusually volatile markets we’ve seen this fall are due to Trump himself. The moves in grain and cattle markets have been driven by funds and other high-speed traders using algorithms that trigger buy-sell orders based on social posts and headlines. Blythe says that’s been happening at least since the first Trump term but says the U.S.-China negotiations have surely been a gold mine for these firms, as they thrive on volatility. 

Those soybean futures we discussed over salsa actually doubled in volatility from Halloween through late the next week, when the U.S. and China struck a trade truce. It was “good” volatility because January beans are up over $1 since mid-October. 

“We haven’t seen $11 soybean futures in about 16 months, so take advantage of situations like that when you can because these rallies may be short-lived with massive crops in the U.S. and South America,” Blythe tells me. “Don’t fall into the trap of thinking, ‘Well, we got to $11. I’m going to wait for $12.’”

He argues that fundamentals still matter­ — we just don’t know what they are lately, thanks to the government shutdown that’s stalled USDA supply and demand and crop production reports since Sept. 12. However, USDA promises to release those two reports this Friday, and the government is opening back up anyway.

Back at the table

Sitting around that table, we had a young couple in the first 10 years of their farming career, and two more of us who’d been at it 30ish years. And I sat there wondering what this all meant for our 20-year-old son who will join us in the next few years. 

When White House whims change the game daily, do any of the old management rules apply? 

Schnitkey says demographics are on my son’s side — and yours — which means they’ll have opportunities, but the strategies of their parents and grandparents may not work. The future is bright, but the path is challenging at the start. (Actually, the whole time, but give them hope.) What he recommends:

• Raise something in addition to corn and soybeans. Think non-GMO, smaller-acre crops or livestock. Cow-calf production could shift east if the West keeps getting drier. 
• Create a side business to generate cash; livestock counts.
• Don’t pursue farm size with aggressive cash rents.
• Buy land when you can.
• Marry well and don’t get divorced. Imagine a household with a six-figure income and health benefits. Also, imagine a happy household.

That’s solid advice for every generation, no matter what happens in D.C. 

Comments? Email holly.spangler@farmprogress.com.