New crop price plateau?
Are today’s $6 and $7 per bushel corn and double-digit dollar soybean prices too good to be true?
Maybe, but they aren’t a flash in the pan either. Scott Irwin, University of Illinois (U of I) agricultural economist, thinks crop prices are on a new plateau. Irwin spoke this week to farmers attending the Top Farmer Crop Workshop at Purdue University.
Granted, there’s lots of room for volatility in all this. Still, Irwin and fellow U of I agricultural economist Darrel Good first predicted a new price plateau for corn, soybean, and wheat back in 2008 and 2009 and are sticking to it.
New plateaus rarely occur. The last one occurred in the early 1970s, when crop prices leaped due to factors including surging demand from the then-Soviet Union. There was talk of a new plateau in the mid-1990s, when corn prices surged past $5 per bushel before backing steeply down later in the decade.
Back in 2008 and 2009, Irwin and Good stated a new plateau started in January 2007. Back then, they predicted average Illinois crop prices of:
* $4.60 per bushel for corn.
* $10.58 per bushel for soybeans.
* $5.80 per bushel for wheat.
So how did they do? Average monthly prices from January 2007 to February 2011 in Illinois actually were:
* $3.99 per bushel for corn.
* $10.09 for soybeans
* $5.36 per bushel for wheat.