The U.S.D.A. announced this week farmers nationwide will be planting 11-million more acres of soybeans this year and cutting corn by nearly eight-million acres. The drop in corn acres could mean consumers will be paying more at the grocery store for a host of products.
Elaine Kub, a market analyst with Data Transmissions Network in Omaha/Council Bluffs, says, "Corn prices and corn demand has been very stable on a higher trend. Both of those things have been trending higher. Everybody needs corn and we can grow as much of it as we can and the market will definitely pay for that. Soybeans, on the other hand, we’ve seen a lot of things come and have been a little bit bearish for soybeans. A very favorable Brazilian soybean harvest, for one, and this idea that soybean acres will come back up in all of the areas that didn’t do too well in corn last year."
She says the soybean market had been a little "overbought and a little overheated" earlier and they are pulling back from that right now. Kub says corn, like oil, is a traded commodity and its value will go up and down depending on supply and demand.
Kub says: "It’s no longer a well-protected market. We’re in a world situation, globalization, where everybody wants this corn and everybody has to bid for it. If a European hog producer wants to buy corn to feed their hogs, they have to bid for it and if a U.S. consumer at the grocery store wants to buy Corn Pops, they have to pay for it. Everybody is competing for a very limited number of resources." Kub reminds Iowa consumers that even though we will likely be paying more at the store for many food items, we’re still far better off than in many parts of the world.
"The sad thing, not only for U.S. consumers, but what it’s really sad for is some of the developing economies and just anyplace where food stability is really questionable," she says. "There’s already been some riots in Pakistan and Egypt and the Philippines are getting short on rice. In the U.S., you pay a little more for your Raisin Bran but it’s not to the extent that it is in may other portions of the world. The U.S. consumer is still very lucky." Kub says we also have took at why grain prices are so high in the first place.
"The government was propping up the markets just for our own food security but now that’s not the case anymore. Part of the reason is that Midwestern farmers have come up with a new source of demand for their product. They’ve built up an industry that bumps up demand for ethanol and bio-diesel and that is a worldwide phenomenon, too. A lot of the soybean oil and soybeans that get exported go to bio-diesel," she says. Kub says it’s very unrealistic to think we’ll ever again see low grain prices.