Electrified by Russia's invasion of Ukraine, commodity prices are sky high, with soybean futures hitting 16,80 USD pros Scheffel exceed, and that USDA predicts highest farm price ever for Wheat. But high prices for Corn, Wheat and Soybeans are much more likely to return to their long-term averages than to mark the beginning of a new era of sustained higher prices, five university economists said on Tuesday.
A return to prices in the $3,90 per bushel range for Corn, $10 per bushel for Soybeans and $5,15 a bushel for wheat, proposed by the Congressional Budget Office in its 10-year baseline, would require "significant adjustments" in the agricultural sector, said economists Gary Schnitkey, Nick Paulson, Krista Swanson and Jim Baltz of the University of Illinois and Carl Zulauf of Ohio State University.
Illinois corn and soybean breakeven costs are higher this year at $4,73 a bushel for corn and $11,06 a bushel for soybeans. With lower market prices, producers would have to cut costs, e.g. B. by doing without expensive fertilizers and other chemicals. Lower revenues could also put pressure on land prices, which will have longer-term implications.
In their blog, the economists cited CBO and USDA forecasts for commodity prices in the coming years; CBO and USDA see above average prices in 2021/22 and 2022/23 followed by lower average prices.
This is a reasonable belief and modeling outcome, particularly given that historical changes in long-term prices are infrequent and typically associated with a sustained change in demand. Moves back to the 2006-2020 averages suggest that the current resilient market due to China and the conflict between Ukraine and Russia is temporary and will also lead to growth in agricultural production, leading to lower prices.
The current spike in high prices has been fueled by comparatively tight global supplies, adverse weather that has created uncertainty about crop production, strong global demand, and the disruption to food supplies from warfare in the Black Sea region.
In its first projection of this year's crop, the USDA said this year's U.S. wheat crop will average 10,75 US-Dollar would yield per bushel, a record high. Corn would average $6,75 per bushel, the second highest ever, and soybeans would cost $14,40, matching the 2012-13 record.