High prices for U.S. corn, soybeans and wheat are not expected to be a short-term shock, according to a new RaboResearch report, “The Grain Drain After Ukraine.” While the sudden shutdown of trade in the Black Sea region has sent corn and wheat prices to their highest in a decade, the ten-year outlook for all major crops has shifted up to a new price level.
The report cites transformative geopolitical changes, continued increases in demand and limited acreage availability as the shift’s drivers. RaboResearch expects the U.S. to increase its exports to help fill the demand gap. For the 2022/23 crop marketing year, RaboResearch estimates the average on-farm price, which takes local basis into account, to be $5.77 for corn and $10.50 for wheat when their export sales increase by 200 million bushels.
Higher prices, however, do not spell bigger profits. Costs for farm inputs such as seed, fertilizer and land will likely also rise, squeezing farmers’ margins over the next decade.
(From the National Association of Farm Broadcasters)