Row crop producers across the country are seeing rising prices and a positive crop market outlook. Alabama Cooperative Extension System (ACES) Economist Wendiam Sawadgo said prices are definitely higher than what producers have seen the past few years.
“There have been a few factors at play,” Sawadgo said. “Trade with China, especially feed grains, has increased demands for US products. This is likely largely due to the trade deal, but also China is working to rebuild its hog herd supply following the African Swine Fever outbreak. For this reason, China is importing a lot of feed.”
Sawadgo said production of corn and cotton in the US was lower than expected because of weather, so USDA’s National Agriculture Statistics Service (USDA-NASS) revised the stock estimates of most crops downward by as much as 10 percent last fall. This lowered the crop supply and prices rose shortly after.
The third factor at play is the COVID vaccine. The vaccine has increased optimism in agricultural markets. The virus has disrupted cotton and corn markets, like other markets.
“Cotton markets have long faced supply chain disruptions due to COVID, but clothing sales are likely to increase as soon as macroeconomic conditions improve,” Sawadgo said. “This should increase demand for cotton.”
He also noted as people begin traveling again, the demand for ethanol should increase; in turn, corn prices will rise.
Sawadgo said it is generally a good idea for producers to lock in some loads at prices that would be beneficial for their operations. The biggest thing he is watching is where prices will fall at planting time. This will affect what farmers plant both in Alabama and nationwide.
For more information on crop markets and farm and agribusiness management, visit the ACES website. Crop producers can also keep up-to-date with happenings in the field by listening to the Alabama Crops Report Podcast.