For more than a year, raw material prices have remained high while grain prices have fallen sharply. Some experts expect grain prices to remain low for some time.
“I would say my view leans toward that scenario,” says Scott Irwin, Ph.D., Lawrence J. Norton Professor and Professor of Agricultural Marketing at the University of Illinois at Urbana-Champaign.He is also the author of back to the futures— An in-depth look at the futures market, how it works, and how it affects our economy.
Furthermore, Irwin agriculture podcast-Provided by agrinovas indiana Hosted by President and CEO Mitch Frazier.
“Unless something really dramatic happens with U.S. crops this summer, I think we’re going to see pretty regular, cyclical declines in crop prices,” he says.
Irwin believes Indiana farmers will likely have to make tough decisions as corn, soybean and wheat prices drop.
“Essentially, the theme will be going backwards and ‘battening down the hatches’ so to speak,” he says. “You’re going to see less aggressive strategies as everyone tries to operate their businesses in a low-flash-margin environment. I think that will become the mainstream of the times.”
For comparison, below are grain prices as of the close of trading on April 23, 2024 compared to April 24, 2023.
maycorn:
- April 24, 2023: $6.63 1/4
- April 23, 2024: $4.43 — $2.20 drop 1/4
Soybeans in May:
- April 24, 2023: $14.83 1/2
- April 23, 2024: $11.67 1/2 — $3.16 drop
Maywheat:
- April 24, 2023: $6.61 ¾
- April 23, 2024: $5.85 — 0.76 ¾ dollar drop
Although Irwin’s outlook sounds pessimistic, he believes the recent drop in grain prices will eventually correct and rise in a different direction.
“No cycle of rising or falling prices lasts forever,” he says. “One of the things you learn by actually studying these markets is the emotional and psychological factors. When prices are near their all-time highs, people tend to get a little too optimistic and think that if they’re always this high, But equally, and sometimes even more so, when prices fall, extreme pessimism prevails, and many begin to believe that they will never be able to get out of this situation. But we always do.”
Click below to listen to the full conversation between Dr. Scott Irwin and Mitch Frazier as part of the Agbioscience podcast brought to you by AgriNovus Indiana.
