Outlook for U.S. Crop Prices Continues to Be Below Average01/11/2017
The U.S. grain price outlook and crop demand for 2017-2018 will likely show no major changes according to Dr. Pat Westhoff, director the of food and Agricultural Policy Research Institute at the University of Missouri.
Trends for 2017 look to stay similar to that of 2016, unless a major disruption in outside factors occurs, such as weather or foreign market changes, according to Westhoff. Prices will continue to be below average, and lower than 2016, based on trends, he said.
Westhoff spoke at a workshop about global crop trends for the upcoming year at the American Farm Bureau Federation’s 2017 Annual Convention and IDEAg Trade Show. about global crop trends in crop production and demand for the upcoming year.
“Lots of pressure will be placed on labor markets where there hasn’t been in the last several years,” Westhoff said. This a result of poor labor markets and a slowing rate of population growth.
“Most of the immediate population growth will occur in the age range of people who are not of working age in the U.S., adding to the stress on the labor market,” Westhoff said.
Yields for global grains and oilseeds have increased by roughly 1 percent per year since 1980; this is the same rate as the global growth in population, Westhoff said. Similarly, the area harvested for wheat, rice, corn and soybeans around the world between 2002 and 2014 increased by 17 percent; world per capita consumption is at a 16 percent yearly increase.
“China and biofuels accounted for all the growth in per capita consumption since 1980,” Westhoff said. Ethanol production and an increase in Chinese consumption per capita has had the greatest effect on grains and oilseeds global markets. “Remove those two factors and we have about the same per capita use of grains and oilseeds,” Westhoff said.
Recently, biofuel growth has slowed and there are questions about the future of Chinese growth, as well. The grain and oilseed markets stand to continue current trends because of this, according to Westhoff.
“World production of the four major crops – corn, wheat, soybeans and rice – increased by nearly 50 percent since 2002,” Weshtoff said. “2016 will be the fourth straight year with above trend global yields for these crops.”
Westhoff also addressed the outlooks on global and U.S. markets for each of the major crop markets separately – corn, soybeans, wheat, cotton and rice – predicting not much change will occur.
Westhoff is a former chief economist of the U.S. Senate Committee on Agriculture, Nutrition and Forestry. He grew up on a dairy farm in eastern Iowa and earned his Ph.D. from Iowa State University.