Prices for corn, soy, and wheat have risen to six-year highs on strong exports to China, following a summer in which 40 percent of the U.S. was in drought, reducing yields.
China has launched a major initiative to boost its domestic pork production; it also is seeking to fulfill its promise to the Trump administration to increase its imports of U.S. commodity crops.
Note: It is long forgotten that just two years ago, in 2019, Chinese pork production was devastated by the Swine Flu when some 440 million pigs (half the pigs in China, which amounts to some 50 percent of the world’s pig population) either died of African Swine Fever or were killed to kill the virus.
Also, food processors are rushing to secure adequate supplies of grains and oilseeds to meet growing consumer demand in anticipation of lockdowns easing.
The cost of grains to feed beef, pork, and poultry – the main cost of raising animals for slaughter – could rise 27 percent this year, economist Will Sawyer at farm lender CoBank, reported in a comment quoted by the Wall Street Journal.
TREND FORECAST: The lofty prices are not only raising farm incomes but also bringing relief to other rural businesses, from equipment dealers to grain brokers.
The gains for rural economies are working their way through the food chain and eventually will appear in higher food prices for consumers. Thus, we maintain our forecast for Dragflation.
