For more than a year now, we’ve seen a sharp drop in grain prices while input prices remain on the higher side. One expert says he expects grain prices to stay on the low side for a while.
“I would describe my views as leaning towards the bearish scenario,” says Dr. Scott Irwin, Professor and Laurence J. Norton Chair of Agricultural Marketing at the University of Illinois 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.
In addition, Irwin is the most recent guest on the Agbioscience Podcast—Presented by AgriNovus Indiana and hosted by their President and CEO Mitch Frazier.
“I think unless something really dramatic happens to U.S. crops this summer, we’re heading into what is a fairly regular cyclical downturn in agricultural crop prices,” he says.
Irwin believes the lower prices for corn, soybeans, and wheat will likely lead to some tough decisions for Indiana’s farmers.
“Basically, the theme will be to pull back and ‘tighten down the hatches’ so to speak,” he says. “We’ll be seeing less aggressive strategies because everybody is going to be trying to operate their businesses in a less flush margin environment. You’ll have layoffs, cutbacks, and capital expenditures—those kinds of things I think will be probably the order of the day.”
As a comparison, here are the grain prices at the close of trade for April 23, 2024 compared to April 24, 2023:
MAY CORN:
- April 24, 2023: $6.63 ¼
- April 23, 2024: $4.43 — A DROP OF $2.20 ¼
MAY SOYBEANS:
- April 24, 2023: $14.83 ½
- April 23, 2024: $11.67 ½ — A DROP OF $3.16
MAY WHEAT:
- April 24, 2023: $6.61 ¾
- April 23, 2024: $5.85 — A DROP OF $0.76 ¾
Even though Irwin’s outlook sounds pessimistic, he believes that the recent downturn in grain prices will eventually correct itself and climb in the other direction.
“No upcycle or downcycle in prices ever lasts forever,” he says. “That’s one of the things you learn really studying these markets is the emotional and psychological element. There’s real truth to this idea that when prices are near the top, people tend to get a little too optimistic and think they’re always going to be this high. But equally—and sometimes even more in reverse—when prices go low, extreme pessimism can take over and many start to believe that we’re never going to get out of this, but we always do.”
Click below to hear the complete conversation between Dr. Scott Irwin and Mitch Frazier as part of the Agbioscience Podcast—Presented by AgriNovus Indiana.
