What’s Driving the Unprecedented Harvest Price Momentum Right Now?
The harvest price momentum this fall has been unprecedented. Corn climbed above $4 this week, cotton prices topped 70 cents. That’s as farmers are also seeing $6 wheat on the board, and soybean prices push closer to $11.
“Obviously, we've gotten a bump from some very strong export sales, some beneficial weather in terms of some challenges down in Brazil and in Argentina, and then also weather impacts in Ukraine and Russia when it comes to wheat,” says. Aaron Smith, with the University of Tennessee Institute of Agriculture. “That's really propelled prices higher, at kind of an abnormal time.”
The "abnormal time" for the price spikes this fall have been a surprise to many. During a period when farmers usually experience lower prices and harvest price pressure, commodity markets are seeing the opposite this year. The positive price story started in August and has accelerated since.
“It may be challenging to maintain that that price momentum moving forward,” says Smith. “A lot will be contingent on what happens with weather and export sales. There are a lot of things that are outside of producers’ control right now. But we've really improved dramatically from where we were in the summer.”
According to John Newton, American Farm Bureau, record corn and soybean export commitments are on the books right now. As exports impress, the export picture unfolding is much different than what producers saw this spring.
? RECORD #corn and #soybean export commitments. Send more ⛴️?? @FarmBureau pic.twitter.com/XVYDAaXq37 — John Newton (@New10_AgEcon) October 22, 2020
“What we're starting to see is a recovery in those (cotton and lumber) markets solely because demand is opening back up globally,” says Andrew Muhammad of the University of Tennessee Institute of Agriculture. “How those markets work is that we primarily export cotton and forest products to Southeast Asian and Asian countries, where they get processed into furniture or clothing in the case of cotton, and then exported back to the United States.”
While agriculture showed resilience this spring and able to meet the needs of shoppers, COVID-19 could have a lasting impact on shopper trends. University of Tennessee Institute of Agriculture is crunching the numbers to see what impacts could stick around long term. Listen to the full discussion from the 2020 U.S. Farm Report College Roadshow from the University of Tennessee.