Weather, War and Input Costs Affect Market Prices

Heat and drought have taken a toll on Texas crop production, says Mark Welch, AgriLife Extension economist. Another issue has been the volatile and varying prices during the summer.

Market Factors: Drought in the Corn Belt. An end to Russia’s grain trade initiative with Ukraine.  An increase in corn acreage over 2022. A leveling out of input costs. A projected increase in ending stocks.

Welch says the basis price, or the difference between the local cash price and the future market price, for feed grain markets has held firm throughout the summer. Additionally, drought in the Corn Belt allowed producers who were able to plant early and get good yields, to also get a significant price increase.

Texas and other southern states have also experienced a spike in forage prices, such as hay and silage, because of the demand for forage from livestock owners and producers.

Also causing prices to spike is the war between Russia and Ukraine.

“We have come back down from last year’s pre-war prices, but there is still a big concern of grain prices and exports,” Welch says. “The grain trade initiative allowed Ukraine to export, but during the last few weeks, Russia has ended the grain trade initiative, and prices have spiked again.”

Producers will have to wait until harvest is complete to know the extent of yield loss from heat and drought.

Possible Record Yield In Mississippi

The story is different for Mississippi producers where yield estimates have steadily increased throughout the summer. The late September U.S. Department of Agriculture forecast put yield at 182 bushels per acre. That estimate is up three bushels from August and is 17 bushels higher than the average harvested in 2022.

“This is the highest yield we’ve had in at least five years and may set a new state record,” says Erick Larson, grain crops agronomist with Mississippi State University Extension Service.

Mississippi’s late summer drought did not affect the crop because most corn was nearly mature. “We had favorable conditions in all the critical stages of growth,” Larson says.

Overall Price Outlook

With U.S. corn production up an estimated 10% from 2022, prices are down. According to USDA projections, the average farm price will be $4.90 a bushel, which is down $1.65 a bushel from last year.

“High input costs kept planted acres down last year,” says Will Maples, MSU Extension agricultural economist. “But as these costs eased some this year, producers responded by planting close to 6 million more acres.

“Higher production means ending stocks are projected up 50% compared to last year, which will continue to dampen any major price rallies.”

Maples says producers who ship their crops by Mississippi barges may see higher prices as the drought continues to reduce river levels to near-record lows.

“There are not really any good options for producers who must deliver straight from the field,” he says. CS

Portions of this article by Randi Williams, Texas A&M AgriLife, and Susan M. Collins-Smith, MSU Extension Service.

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