Will Crop Supplies Tighten Without a Big Weather Problem?

by

After three record crops around the world, grain prices are under heavy pressure from ample supplies. The impact is probably felt nowhere more than in the U.S., as the strength of the U.S. dollar is also restricting exports.

Some analysts are saying it will take a major weather issue — maybe a flip from El Nino to La Nina — to reduce world production, draw supplies down and raise prices. Mike Krueger of The Money Farm isn’t one of them.

Speaking to American growers at the Prairie Grains Conference in Grand Forks, ND on December 10, Krueger said he doesn’t think a weather disaster will be required to tighten world balance sheets.

“Really we’ve never had two record crops in a row and now we’ve had three, and what that’s done is masked the steady and ongoing increase in demand,” he says in the video below. “I think demand continues to grow, and without record production we’ll see things tighten up and eventually prices have to move.”

“In many parts of the world, including the U.S., we’re seeing returns per acre at breakeven at best and in a lot of cases, negative,” he continues. “I think that means we have to see reduced acreage and reduced inputs and maybe some of both.”

Even with good weather, he expects supplies will begin to tighten in 2015-16.

Mike Krueger shares his thoughts on world crop supplies, the impact of the strong U.S. dollar, changes in Chinese ag policy and one weather problem that’s relevant for Western Canadian pulse growers — the drought in India:


Related: Tough Outlook for Grain Markets as Production Simply Exceeds Demand

Please register to read and comment.

 

Register for a RealAgriculture account to manage your Shortcut menu instead of the default.

Register