Corn, Soybean, and Wheat Prices Fall

Prices of agricultural commodities have been sliding thus far in 2015 due to a variety of factors, among them the strong dollar, weak demand in China, and most importantly, excess supplies due to major innovations in crop yields.

According to the recent August USDA World Agricultural Supply and Demand Estimates (WASDE) report, over the past 12 months, soybean prices are down 13%, while wheat and corn prices are down 19% and 8%, respectively.

The U.S. is the largest grain exporter in the world by a significant margin, and increased grain prices would result in a boom to struggling farmers. Recent price stability and potentially lower than expected yield this harvest could be a bullish signal for grain prices, but there are still headwinds. A strong U.S. dollar makes the product grown here more expensive for importing countries which could then shift away from U.S. purchases, and in turn, lower prices even more. Demand could also be reduced by the recent slowdown in emerging market economies, such as China, adding more downward price pressure. If low grain prices are here to stay, look to those who benefit.

The recent World Agricultural Supply and Demand Estimates (WASDE) report is available on usda.gov