RFA Report

WILL THE PLUNGE IN GRAIN PRICES MEAN LOWER FOOD PRICES AT THE SUPERMARKET?

OCTOBER 15, 2008


By all accounts, the 2008 corn, wheat, and soybean crops are well on their way to being among the largest ever in the United States. According to the U.S. Department of Agriculture’s October 10 Crop Production Report, farmers are expected to produce the second-largest corn crop ever, the largest wheat crop in over 10 years, and the fourth-largest soybean crop on record.1 USDA’s most recent report estimated the 2008 corn crop at 12.2 billion bushels with an average yield per acre of 154 bushels. This marks a significant turnaround from July, when USDA projected a crop of 11.7 billion bushels with a yield of 148.4 bushels per acre.

The expectation of increased production, coupled with a decrease in speculative investment in the commodities markets and recent fall in oil prices, has led to sharply lower grain prices in recent weeks. While there was much media attention surrounding the run-up in agricultural commodities prices, coverage of the precipitous plunge has been virtually non-existent.

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