Agricultural Economics Department

 

Date of this Version

April 2001

Comments

Published in Cornhusker Economics. April 11, 2001. Produced by the Cooperative Extension, Institute of Agriculture and Natural Resources, Department of Agricultural Economics, University of Nebraska - Lincoln.

Abstract

Lately, it seems that one of the most commonly asked questions is, will we ever see grain prices recover? There are some indicators that would leave us to believe that there is some light at the end of the tunnel. It appears that global consumption over the past few years has been catching up with the increase in production that has occurred recently. When looking at the chart on the next page, the grain stocks to use ratio is at a relatively modest 16.5 percent. This is the lowest since 1996 when world inventories declined because of a relatively poor harvest in 1995. The graph shows that consumption actually outpaced production in 1999. But from 1996 through 1998, production was significantly higher than consumption. While this is an indication that we could start to see prices rise, we must bear in mind that an average or a little better than average crop would keep the lid on price movements.

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