After three years of record-breaking, bin-busting corn harvests, corn prices have defied all conventional wisdom by skyrocketing. Bred females have lost $300 and calves $150/head in the initial market implosion.
In the short-term, fear and greed rules, and they certainly took over the last several weeks. When one domino fell, the others followed closely, and market fundamentals became irrelevant. We went from a "never having another bad day" attitude to "we are heading to zero at Mach 1."
While the reality is somewhere in between, the situation illustrates why commodity producers always seem to focus on supply. It's not because supply is the biggest factor; it's simply the factor we can quantify either before or after the effect, and supply to some extent is also under producers' control.
Demand is a more nebulous measure; it's rarely fully known until after the transaction occurs. Still, it is demand that has rallied the corn market; it is demand that has made it possible for our industry to enjoy unprecedented prices for an extended period of time. It is demand that will take corn to new price levels, as well.
It's unfortunate our industry has always been so supply-driven and cost of production-oriented. Just imagine what we could have done if we'd focused on growing the top line instead.
-- Troy Marshall