An End To The Gold Rush In Grain?

Inside Dakota Ag

Current high prices for corn and soybeans may not last forever, says a CHS senior vp of marketing.

Published on: December 12, 2011

Rick Browne, CHS senior vice-president for grain marketing, had an interesting presentation at the Prairie Grains Conference in Grand Forks last week.

It was about the end of the "gold rush" in grain.

Browne, who has more than 30 years of experience in the grain marketing with CHS, doesn't buy the idea that we've reached a new plateau in grain prices, or that the world's population growth is going to keep grain prices this high forever.

The grain market has always been, and probably always will be cyclical, he said.

Delicate balance

What could start the grain cycle back on the downward slide?

The world's population might not grow as much as many people fear, Browne said.

Already there is talk among experts about population growth leveling off. A change in China's population trend may come as early as 2013. Because the government has imposed a one- child per family limit for the past 15 years, China is going to grow old and less progressive quickly, Browne said.

A slowing of the world economy could also significantly reduce the demand for grain, and high corn and soybeans prices will force buyers to look for alternatives. Already, there is a big shift from corn to feed wheat happening in the market, he said.

On the supply side, farmers may produce grain more than most market expects.

More good farmland around the world, especially in Brazil and Russia, is likely to come into full production if prices stay high.

More and more progressive farmers from the U.S., Australia and Canada will take their skills and technology to the new lands to cash in on the opportunity.

Another 1 billion bushels of grain could be produced worldwide, he said.