Expert sees little change in grain prices

Associate Editor

ANNAPOLIS, Md. (Dec. 22, 2015) — When it comes to grain commodity prices, expect more of the same in 2016, a grains expert told a group of state agriculture insiders last week.
A worldwide abundance of grain paired with deflation in the commodity markets and other factors, including the weakening Chinese economy, the strength of the U.S. dollar and stagnating demand for biofuels and meat have created a bearish outlook for the next year, said Kevin McNew, president of GeoGrain and an adjunct professor in the University of Maryland’s Department of Agriculture and Resource Economics.
McNew was a speaker at the department’s 2015 Agricultural Outlook and Policy Conference on Dec. 16.
The number of corn acres planted nationwide is expected to slightly decrease from 90.6 million in 2014-15 to 88.4 in 2015-16, McNew said, with ending stocks expected to remain about 1.8 billion bushels.
More Americans are also shifting to vegetarian or vegan diets, and it’s becoming increasingly relevant to agricultural concerns, McNew said.
Only 1 percent of the country was vegetarian in 2009, he said. Today, about 5 percent are, and it’s more than animal welfare concerns driving the trend.
Recent reports questioning the long-term health impact of consuming meat and concerns about the negative impact of animal agriculture on the climate are fueling the change.
McNew cited a report that said 12 percent of American adults strongly agree and 19 percent somewhat agree that they are “eating many meatless/vegetarian meals.”
“All of these things are shaping consumer demand, and in ag, are we responding?” McNew said. “I don’t know.”
Per capita consumption of high fructose corn syrup, for instance, has declined between 1.3 and 3.3 percent every year since 2000, he said.
The world soybean market is growing more competitive.
China continues to be the key driver of growth in the soybean market, purchasing more each year, but South America is also growing more each year, with production soaring from less than 60 million metric tons in 1999 to more than 160 million metric tons in 2015, according to McNew’s presentation.
The USDA is looking at fewer projected acres in 2016 — about 82 million — than 2014’s 83.3 million. Ending stocks are expected to rise from 191 million bushels in 2014-15 to 465 million bushels in 2015-16.
The outlook was more rough for wheat.
“There’s no real demand driver in the wheat market,” McNew said. The United States “is a price taker in the global market for wheat.”
A potential La Niña in 2017 could upset the global wheat market and improve conditions for American growers, he said.