Mount Vernon News

MOUNT VERNON — The rise in grain prices over the last year has provoked additional production by Ohio farmers, but that additional production has not evened out the volatile market.

The U.S. Department of Agriculture released figures this week forecasting that Ohio’s winter wheat production will come in at 64 million bushels, 39 percent higher than last year’s harvest. This bounty has brought prices down from the March high of $9.94/bushel to a current rate of $7.91/bushel, but that is still almost double the April 2007 price of $4.10/bushel.

Grain market prices are unlikely to return to lower rates due to a number of factors. One direct factor is the failure of wheat crops in recent years in both South America and Australia, which has helped foster a global food crisis resulting in shortages and rioting in many countries.

Recent reports by the Wall Street Journal and the Associated Press point out that an additional factor now beginning to amplify the movements of grain markets is the presence of speculators and other investors who see the recent steep prices in agricultural commodities as a prime money-making opportunity. These speculations are driving prices temporarily higher than they are likely to remain in the long run, thus if and when the short-term investors sell, agricultural commodities will be vulnerable to taking a dramatic drop. The global increase in demand from China and other developing countries could, however, moderate that.

The New York Times has also cited futures markets where investors are willingly buying grain futures at higher prices than the current cash market, an anomaly that is creating considerable confusion about the current value of wheat crops. The Commodities Futures Trading Commission in Washington, however, has denied this, saying that the market is simply responding to supply and demand.

The USDA reports noted that Ohio hay stocks are very low this spring, amounting to 165,000 tons on May 1, compared to 356,000 tons on hand at the same time last year. The wet spring, a severe late freeze and summer drought negatively affected last year’s hay crop in Ohio. The reports also state that egg and milk prices remain substantially higher than last year.

The reports also noted that beef prices are down from last year’s level. This is likely to be as a result of early culling of herds nationwide due to high feed costs.