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Supply shock in agri commodities

06 Sep

Corn’s explosive takeover, mighty Chinese soybean demand and a weak dollar cause crisis for other crops

From the Deep South to near the Canadian border, farmers have heard the piercing call of corn and responded by abandoning centuries-old acreage practices. Farmers, economists and industry officials alike predict that things might never go back to the way they were. The result: shock in the supply chain for the crops that corn has replaced.

The shock reverberates from the long-tested laws of supply, demand and price. In the case of corn, it’s fast-paced demand from ethanol that’s now soaking up 40% of the crop. And it’s not only a corn story. The burgeoning Chinese demand for soybeans also plays a role.

Yet even more is involved than just demand, because an increasingly weak U.S. dollar has also been a major player in making U.S. crops more competitive than those raised in other countries.

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Posted by on September 6, 2011 in Agriculture

 

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