Purdue: Crop Prices Expected to Remain Low
An agricultural economist at Purdue University says the country has seen a depressed agricultural economy in 2016, though things may improve a little bit in 2017. Chris Hurt, editor of the Purdue Agricultural Economics Report says U.S. production on corn, soybeans and wheat has outpaced usage over the last three years, creating abundant inventories which have led to the lowest prices in about 10 years.
Hurt tells Inside INdiana Business that cost of production is not at its lowest point in 10 years, which creates a disequilibrium, in which grain prices are lower than the production costs.
"This gives us very low margins, for some, negative margins in crop production," said Hurt. "Indiana agriculture is highly dominated by crop-based agriculture, so we really feel that impact when costs of production are higher than the crop prices."
The report says corn prices for Indiana producers are expected to average $3.45 per bushel in 2017, down from $3.85 per bushel in 2015. Hurt says soybean prices are expected to fare better at around $9.50 to $10 per bushel.
Hurt says he expects the cost of production versus usage trend to continue for a little while longer "as we try to get more adjustment to the downside in cost and we get some reduction in production that can actually enhance prices of these crops a little bit more. We think the transition still is a couple of years away. We’ve been in that for three years and we think we have two more years to go."
You can view the full Purdue Agricultural Economics Report below: