Skip to main content

Increased Global Grain Production Means Lower Grain Prices for U.S. Growers


Thanks to increased global grain production and lower domestic demand for grain for ethanol, crop producers will find 2014 to be tougher than the past few years and should prepare now for lower prices.

“Prices reflect that we have moved from an era of scarcity to one of adequate inventories and prices have responded by moving lower,” said Matt Roberts, an Ohio State University Extension economist. “We are already seeing lower prices come into the market, and unless U.S. or South American acreage declines, those prices are likely to continue to move lower.

“The prices we had earlier in the year aren’t guaranteed to return.”

Thanks to several factors including no growth in ethanol demand and expanded global crop acreage, markets are moving back toward matching supply and demand, Roberts said.

Add another year of 160 or more bushels per acre yields on corn and 42 bushels per acre soybean yields, and growers can expect to see even lower prices that are well below the cost of production on land that has been purchased or cash-rented in the past three to four years, he said.

“Prices will only return to profitable levels if supply declines due to acreage leaving primary row crops or demand returns. This will likely create a significant financial strain in crop-growing areas.”

In order to prepare for the impact of lower prices, farmers should build a working capital cushion of a year to 1.5 years of land charges above what they typically need to operate.

Source:
Ohio State University College of Food, Agricultural, and Environmental Sciences


Market Watch
Nuts and Grains
Farm Supply
Farm Magazines
Artwork: Win a Good Harvest: Increase Grain Production


Popular posts from this blog

Pork Exports Still Down

U.S. beef exports remained on a record-shattering value pace in October, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). October pork exports trended seasonally higher compared to recent months but were still below the results posted in October 2017. Lamb export volume in October more than doubled year-over-year, while value increased nearly 50 percent. October pork export volume was 207,725 mt, the largest since May but still 2 percent lower year-over-year, reflecting smaller variety meat exports. Export value ($536.5 million) was also the largest since May but still down 5 percent from a year ago. For January through October, pork exports were 1 percent above last year’s record pace at 2.02 million mt, while value was also up 1 percent to $5.33 billion. For pork muscle cuts only, January-October exports increased 5 percent from a year ago in volume (1.63 million mt), valued at $4.43 billion (up 2 percent). Source: U.S. Meat Export Fed...
Read more

Low Milk Prices Push Dairy Farm Consolidation

A long period of low milk prices will likely accelerate dairy-farm consolidation in Pennsylvania, according to an industry expert in Penn State's College of Agricultural Sciences. Chad Dechow, associate professor of dairy cattle genetics, sees the United States dairy industry migrating more toward the hog industry model. A sizable contingent of small farms that can produce milk cheaply, rely on nonfarm income sources, or incorporate a niche market will remain. The majority of milk, however, will be produced by a limited number of very large operations with several thousand or more cows spread across "satellite dairies." "We are likely to see fewer single-site, large-family dairies," he said. "Much of this consolidation in Pennsylvania will come from large family dairy farms that continue to grow and some operators may come from Western dairies that purchase satellite dairies farther east." "Unfortunately, some 1,000-cow operations that would have ...
Read more

Beef and Pork Exports Down

U.S. beef and pork exports opened 2021 below the large volumes posted a year ago, according to January data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef exports totaled 105,047 metric tons (mt) in January, down 2% from a year ago, while value slipped 3% to $653 million. The decline was due mainly to lower beef variety meat shipments, as muscle cut exports were steady with January 2020 at 81,398 mt, valued at $584.4 million (down 1%) and accounted for a larger share of production than a year ago. January beef exports were very strong to South Korea and continued to gain momentum in China. Following a down year in 2020, exports also rebounded to the Middle East. January pork exports totaled 248,656 mt, down 9% from a year ago but slightly above USMEF's projections. Export value was down 13% to $642.8 million. Pork muscle cut exports were down 11% in volume (208,234 mt) and 15% in value ($551.3 million), while pork variety meat shipments trended modes...
Read more