Weather, Wall Street affect U.S. agricultural commodity prices

Penn State Live
Friday, October 14, 2011

UNIVERSITY PARK, Pa. -- Recent weeks have been bad for agricultural commodity producers, with falling prices impacting Pennsylvania's farmers. An economist in Penn State's College of Agricultural Sciences said there are reasons why prices for corn, milk, soybeans, beef, pork and wheat have fallen sharply.

James Dunn, professor of agricultural economics, noted that what appears to be plunging prices are actually a price correction, after a year of climbing prices due to global demand and an extremely tough summer of floods and droughts nationwide.

"For the last several weeks, prices for basic commodities have been going down sharply," Dunn said. "Some went down a few weeks ago, others went down recently, but all basic agricultural commodities that are of interest in Pennsylvania have dropped in the last two months -- pretty substantially in most cases.

"Some by 20 percent, others by just 10 percent, but all are down considerably. Corn and soybeans have bounced back somewhat this week but still are well below their levels in early September."

Dairy farmers are especially hard-hit, because the price they're getting for raw milk has dropped drastically while the price of feed grain has not gone down as much, according to Dunn. The disparity is compounded by excessive spring rain, summer drought and flooding in the Northeast and record drought in the Southwest. The harsh weather wiped out much of the feed corn and forage crops intended to feed dairy herds.

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