February 18, 2010


Global grain prices to remain high for next decade



Worldwide wheat, corn and oilseed prices are projected to remain historically high and stable at around today's levels until 2019.


That is assuming there is no unforeseen weather or economic shocks. Renewed economic growth following the recession will help boost world demand and trade for agricultural products, according to the USDA's annual long-term forecast.


While crop prices have dropped from their mid-2008 peaks, they are projected to remain historically high, above pre-2006 levels as a result of rising world demand for grains, oilseeds and livestock products, said the report.


Growing demand for biofuels will also help support prices, with expansion of biodiesel use in the EU boosting demand for vegetable oils. Although livestock producers continue to adjust to the higher feed prices seen in 2007 and 2008, the report expects US farm incomes to improve.


Increases in production expenses offset some of the gains in cash receipts, resulting in net farm income rising moderately from 2011 to 2019. US retail food prices increase more than general inflation through 2012, but then return to a longer term relationship of rising less than the general inflation rate over the last half of the projection period, according to the USDA.

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