Grain Prices ‘Well-Supported’ for Next Three Years, says RaboResearch Economist

U.S. farmers have seen prices skyrocket for commodities, and the outlook remains positive, according to Steve Nicholson, global strategist for grains and oilseed at RaboResearch. He predicts grain prices have the potential to keep farmers’ spreadsheets in the black for the next few years.

“The fact is, from a producer's point of view, I think these prices will be well-supported because of all these things, these world events, that are happening at the same time,” says Nicholson, an economist. “We know producers will, at some point, catch up with the demand piece, but it looks like that's several years away.”

Nicholson discussed RaboResearch’s recently released 10-year outlook, The Grain Drain After Ukraine, on AgriTalk with Host Chip Flory on Thursday. More information on the report is available at www.raboag.com

Positive Fundamentals Were Already In Place
Before Russia invaded Ukraine, Nicholson says the fundamentals were in place indicating the next few years could be a boom time for grain. “And now, we’ve thrown fuel on the fire with world events,” he notes.

Nicholson says it would be difficult to overestimate the impact of the war on prices and trade.

“One thing we suspect is this will change all the trade flows around the world, particularly when it comes to corn, wheat, sunflower oil, barley and rapeseed,” he says. “The reason is if you’re a buyer, you don’t know whether you’re going to be able to get them from there (Ukraine).”

The immediate impact of the war on prices globally was dramatic. For wheat, prices soared 50% as Russia moved into Ukraine. Corn jumped about 13% in price. “It was much less because we have more corn, but it gives you an idea of how big a deal this is globally,” Nicholson says.

Russia Still Has Many Customers
He points out that only North America, Europe and Australia, and then Japan and South Korea  to a lesser degree, are applying sanctions against Russian. Nearly all of Asia, Africa and South America are not following the sanctions.

“So Russian grain has a home,” he says. “Grain is like water. It will find the crack and move where it needs to go. It may not be the most efficient, and it may not be at the lowest price, but it's going to find a way there.”

You can listen to the complete discussion between Nicholson and Flory on AgriTalk here:

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