Harvest Pressures Affect Corn and Soy Prices

December 5th, 2013 TKennedy_admin

The past three years corn production, with harvests hindered by drought and high temperatures, pushed conventional corn to record setting prices of over $7.99 per bushel. Organic corn spiked as well, hitting $16. This year, however, farmers have seen a huge change, as pressures from a very productive harvest have pushed prices down drastically late in the year.

Of course, last month’s government shutdown kept analysts in the dark, without United States Department of Agriculture information on a corn crop that had been predicted to be the largest of all time. Even with a rise in worldwide demand, there is expected to be no shortage in corn. Because of the recent high prices, more corn has been planted around the world as well, further contributing to the abundant supply.

In response, U.S. farmers are expected by some to reduce the amount of corn they grow, and increasing their focus on soybean production. While this might drive the price of corn back up, others disagree, believing that farmers will stay put and the price of corn will stabilize.

The U.S. conventional soybean harvest was very good this year as well. However, in the U.S., we don’t produce enough organic feed or food grade soybeans to meet the domestic demand, which keeps prices at a stable, but higher price. Coupled with the strong South American production, prices are expected to stay low for the time being. A slowdown of growth in China, who imports the majority of the world’s soybeans, also contributes to the change in price.

The prices of commodities like soy and corn have been increasingly volatile over the last few years, for a variety of factors. Analysts and traders, however, can count on harvest pressures to lower prices as long as the crop remains as productive as it is.




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