Higher commodity prices expected in 2011


Jan. 24, 2011 at midnight
Updated Jan. 24, 2011 at 7:25 p.m.

From corn stalks to cotton bushels, soybeans and more, the story was about the same as 2011 kicked off: stronger-than-usual commodity prices for farmers.

And, although no one holds the crystal ball, agricultural professionals estimate such prices will continue through the year.

The increase is due in part to supply concerns, said Mark Waller, a professor with the Texas AgriLife Extension Service in College Station. Although the United States' economy is struggling, countries such as India, Japan and Brazil show continued growth and demand for products.

Many times, when commodity prices rise, it's a short-crop phenomenon, Waller said, explaining producers grow more of a specific crop, meet that demand and then prices return to normal. Today's situation has potential to stick around because farmers have more flexibility in what to grow.

"It's what works best for them," he said, explaining producers can factor in input costs and more. "This is not so much a short crop driven thing, It may have more staying power than normal."

Corn prices have been up for probably eight years, mainly because of the basic principles of supply and demand, said Joe Janak, Victoria County extension agent. Processes such as ethanol production increased use of corn, he explained, and production in some areas, such as Argentina, is down.

Worldwide corn stocks currently sit at an estimated 55 days of use available. That's the second-lowest supply in 20 years, he said, explaining about 90 days of use are typically available.

Grain sorghum and soybeans follow closely behind corn, Janak said, explaining producers predict decent prices in 2011.

Cotton is slightly different although prices seem to be holding steady and increasing some, Janak said. The crop's stocks-to-use ratio is the lowest it's been in eight or nine years.

The last few months of 2011 brought historically high cotton prices, but most Crossroads farmers sold during the summer, before the increase, Janak said.

Based on economic projections, the crop will likely remain in the $1 range, he said, although weather patterns always have potential to bring unexpected change.

"If there are some calamities, it could get up to $1.35," Janak explained. "If things hit just right throughout the world, prices could drop to the 90s or 80s. It just depends."



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