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Agricultural Programs
24
Aug
2016
Supply and Demand for Field Crops – August 2016
Author: Archie Flanders, Extension Economist

By Archie Flanders, Agricultural Economist

The primary components of market conditions that determine prices for U.S. field crops are the supply and demand situation for each crop and the value of the dollar. Supply and demand conditions are indicated by stocks-to-use ratios which are updated by U.S.D.A. monthly reports. Crop prices attempt to ration supply with anticipated demand to achieve equilibrium stocks-to-use throughout the marketing year. As the marketing year advances, projected ending stocks become projected beginning stocks for the next marketing year and impact price expectations for spring-planted crops. Foreign rice estimates for 2016 ending stocks and projections for 2017 ending stocks are currently not as tight as reports in previous months. These revised stocks-to-use levels in markets outside of the U.S., coupled with continued strength of the dollar, are increasing downward pressure on U.S. rice prices. Projected production increases of meat, poultry, and dairy products in 2016 and 2017 will contribute to reducing excess supplies of feed crops. Expectations are not for this to be reflected in crop prices until the 2017 crop year. Global demand for soybean meal as a feed ingredient is maintaining soybean prices at historically high levels relative to current corn prices.

More current supply and demand information – August 2016


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