The U.S. grain price outlook and crop demand for 2017-18 will likely show no major changes, according to Dr. Pat Westhoff, director of the University of Missouri's Food & Agricultural Policy Research Institute.
This is unless a major disruption in outside factors occurs, such as weather or foreign market changes, Westhoff added. Prices will continue to be below average and lower than 2016, based on trends, he said.
Westhoff spoke at the American Farm Bureau Federation's 2017 Annual Convention and IDEAg Trade Show about global crop trends in crop production and demand for the upcoming year.
“Lots of pressure will be placed on labor markets where there hasn't been in the last several years,” he said, adding that this a result of poor labor markets and a slowing rate of population growth.
Most of the immediate population growth will occur in the age range of people who are not of working age in the U.S., adding to the stress on the labor market, he explained.
Yields for global grains and oilseeds have increased by roughly 1% per year since 1980; this is the same rate as the global growth in population, Westhoff said. Similarly, the area harvested for wheat, rice, corn and soybeans around the world increased 17% between 2002 and 2014, while world per capita consumption saw a 16% yearly increase.
“China and biofuels accounted for all the growth in per capita consumption since 1980,” Westhoff said. Ethanol production and an increase in China's consumption per capita have had the greatest effect on global grain and oilseed markets. “Remove those two factors, and we have about the same per capita use of grains and oilseeds,” Westhoff said.
Recently, biofuel growth has slowed, and there are questions about the future of demand growth in China as well. The grain and oilseed markets stand to continue current trends because of this, according to Westhoff.
“World production of the four major crops — corn, wheat, soybeans and rice — increased by nearly 50% since 2002. 2016 will be the fourth straight year with above-trend global yields for these crops,” he said.
Westhoff also addressed the outlooks on global and U.S. markets for the major crop markets of corn, soybeans, wheat, cotton and rice separately — but predicted that not much change will occur.