[Originally posted in April 2021] Prices for basic components of livestock feed have risen dramatically in the past several months. Our hogs are raised on pasture but supplemental feed is a significant part of our overall cost to raise a hog from birth to maturity. So this feed price inflation will force us to raise prices for our pork. Corn prices at the largest feed store in the county (Williamson County Grain in Taylor) increased from $6.50 to $8.75 for a 50lb bag over the first 6 months 0f 2021 – up 35%! And this is the best price in the area. (*May 2022 Update: that same bag of corn is now $9.50) (*September 2022 Update: that same bag of corn is now $10.00)
Our cattle are grass fed only, with bought hay and alfalfa supplements in the winter. Inflation will likely increase these costs too but so far increases have been less than for hog feed and corn so we can hold our beef prices steady for now.
Recent reports:
(Bloomberg) — A crop rally in the U.S. is threatening to make essential food commodities dramatically more expensive, and the costs could soon spill over onto grocery store shelves.
Wheat, corn and soybeans, the backbone of much of the world’s diet, are all surging to the highest since 2013 after gains last week had some analysts warning that a speculative bubble was forming.
Bad crop weather in key-producing countries is a major culprit. Dryness in the U.S., Canada and France is hurting wheat plants, as well as corn in Brazil. Rain in Argentina is derailing the soy harvest. Add to that the fears of drought coming to the American Farm Belt this summer.
Meanwhile, China is gobbling up the world’s grain supplies, on track to take in its biggest haul of corn imports ever as it expands its massive hog herd. Rumors are swirling that the Asian nation is working on 1 million metric tons of new corn purchases, according to Arlan Suderman, chief commodities economist at StoneX.
Crop Prices Soar to 8-Year High, Renewing Food Inflation Fears
This article discusses the impact of the Federal Reserve adding trillions to the money supply, specifically the impact on corn prices (per bushel).
(AgWeb) Commodity prices continued to race higher on Thursday, with corn trading the limit higher. Soybeans and wheat also saw prices surge higher with double-digit moves. Arlan Suderman, StoneX Group, says there are several factors fueling the markets, but one stands out.
“M2 money supplies are up $4.3 trillion since the beginning of the pandemic; we know much of that money has made its way back into the markets and is available, is seeking a home, seeking the best story, if you will,” says Suderman. “The equity market is slowing momentum. The energy market now is facing fears that the third-largest user of energy, India, has rapidly rising COVID numbers and is going into lockdown. And that really leaves the grain and oilseed market as the most attractive avenue. And yes, they do have a fundamental story.”
Darren Frye, Water Street Solutions, says the fundamental story is evident, as demand from China continues to show strength, and weather issues continue to pop up in South America.
“I can’t say enough about how strong the fundamentals have been, and they’re growing,” says Frye. “Now we see the spreads reacting. We see basis reacting. We see markets just tightening down on their available supplies.”
Soybean prices made contract highs earlier this week, topping $15 for old crop. But with consecutive days of double-digit price moves, are $16 soybeans next? Frye says it’s possible, as is $7 for old crop corn. And, he says the story is also friendly for new crop.
“If you take a look at what’s going on fundamentally, both domestically and then abroad, and then you take a look at what the charts are pointing at, things are in alignment,” adds Frye. “We could see this market easily go to the next targets. And those targets are really around that $7 area in old crop and around $5.60 in December corn, which we’re almost there. And then, $6 is the next target in new crop corn.”
Corn, Soybeans Blow Past Contract Highs, Could Fundamentals Fuel $7 Corn, $16 Soybeans Next?
Macrotrends.net publishes a chart tracking corn prices over the last several years, along with the current day’s price.