- Grain prices have fallen to their lowest level in four years.
- American farmers are expected to harvest record amounts of corn and soybeans.
- Weather conditions were favourable in the world’s major agricultural areas.
Good harvests push down prices
Despite reports of extreme weather conditions around the world, major agricultural areas have experienced favorable weather conditions during this year’s growing season. This has led to overproduction of key agricultural commodities and thus significantly lower prices compared to 2022 and 2023, Bloomberg reports.
The Bloomberg Commodity Index of grains and oilseeds has fallen to its lowest level in four years, with prices for wheat, corn and soybeans down about 50 percent from their 2022 peak following Russia’s invasion of Ukraine.
The U.S. Department of Agriculture is forecasting that the nation’s farmers will reap record yields in two major crops. Scott Irwin, a veteran agricultural economist at the University of Illinois, describes the growth as “jungle-like.”
Global trend towards increased production
The favorable weather conditions extend from the Midwest of the USA to the plains of Kazakhstan, from the Brazilian savannas to the Australian grasslands. Even in Spain, a major olive oil producing region, the growing season was favorable.
Compared to ten years ago, the world is expected to harvest about 10 percent more wheat, 15 percent more corn, almost 30 percent more soybeans and about 10 percent more rice in 2024/25. With the exception of corn, all of these important food crops will reach record production levels.
This increase in productivity is due to advances in agricultural technology: better seeds, pesticides, fertilizers and machinery.
Impact on consumer prices
It’s important to note that lower wholesale prices don’t necessarily have a direct impact on consumer prices. What consumers pay depends on several other factors, including energy costs and wages, as well as whether manufacturers and retailers pass on the savings or increase their profit margins. But it does increase the chance of lower food prices.
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