A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Grain farmers are concerned by exceptionally low prices

05 October 2009

A little over a year ago, each and every one was worried about the record high prices of agricultural commodities on international markets, especially those concerning wheat. Twelve months later, the same people are still worried, but about today’s exceptionally low prices. While stock markets are slowly recovering the losses incurred since the onset of the financial crisis, wheat pales in comparison to other commodities (energy, ores, etc…). On the Chicago futures market, wheat reached approximately $4.40 per bushel (27 kilograms), that is to say 25% of the March 2008 price of $12.80.

These prices can be explained in part by exceptional global wheat crops (estimated at about 665 million tons by the International Grains Council, or IGC, and the US Department of Agriculture), yields that mark a return to short term affluence and replenish global reserves (163 million tons against 118 million tons in 2007/08).

Consequently, prices should not rise sharply in the short run and given the current grim economic conditions. The situation is indeed worrying producers since today’s price levels are “equal or even lower than average production costs in the United States and in Europe,” according to the Société Générale’s analysts quoted in Les Echos1. Are we going to see the current dairy industry crisis gain the grain sector?

Yet, we must reappraise the situation to assess the fact that prices will not rise before some time even if, according to the IGC, the 2009/10 harvests should be as good. It is indeed possible that other factors play a role in price levels, such as speculation, production input costs, etc…

1 Les Echos, September 30, 2009, “Growing global reserves are pulling wheat prices downward”.

Page Header
Paris, 26 April 2019