Maybe a silver lining lurks behind the dark cloud of declining grain prices—the bumper crops on the way to bins now may pressure prices downward, but they also could add stability to what has been a volatile market.
“The higher stocks that we’re seeing build in the United States over the last several years — also around the world — are important factors in keeping up with increasing demand, across the grain complex,” said Dr. Mark Welch, AgriLife Extension grains marketing economist in College Station.
A dramatic increase in prices over the last several years comes from increased demand led to lower stocks, he said, which has stimulated growers to plant more acres. Recent droughts cut stocks even further, but this year, because of a dramatic increase in production due to record yields in U.S. corn and soybeans, there has been a “rebound” in stock levels.
One way economists look at grain stocks is as the number of days of use in storage at current consumption levels, Welch said. Read more.