Grain and protein meal prices are currently trading at their second highest level ever compared to the summer of 2008.
Weather woes in main producing regions and a plunging foreign exchange value of the dollar are major factors in this price increase.
U.S. wheat stocks are down 123 million bushels from the previous year and this corresponds with global wheat stocks approaching all-time lows. High wheat prices should encourage more wheat production. Wheat prices should hold in the $5.50-5.75/bu range with the upside possibility of $8/bu depending on production levels.
With U.S. corn production coming in below expectations and with problematic production worldwide and a very tight stock situation the last few years, average farm price of corn is now being forecasted at a record $5/bushel. With these high prices, it is expected that corn acreage will increase significantly in the next couple of years. Unlike corn and wheat, soybean stocks are more comfortable, and U.S. production could reach record levels.
China remains a big buyer for U.S. soybeans (over 55 percent of the U.S. crop). Price is a concern for the soybean industry and if wheat and corn prices remain high, soybeans may lose acreage to these other crops.
(This outlook report was presented at the recent 29th annual Agribusiness Management Conference in Fresno, Calif. sponsored by the Center for Agricultural Business, California Agricultural Technology Institute and the Jordan College of Agricultural Sciences and Technology at California State University Fresno.)