High grain prices predicted to continue until mid-2013

Escalated grain prices will continue until the middle of next year, according to Bob Young, chief economist with the powerful American Farm Bureau Federation in Washington.

Prof Young, whose organisation represents almost 6m farmers across the US, told Irish agri-food leaders attending yesterday’s ASA conference that severe drought had led to a reduction of 30% in US maize yields.

“Like Europe, the US is no longer in the business of holding grain reserves,” said Prof Young. “So when you combine no reserves with a ‘short crop’ and strong demand, the inevitable result is escalating prices.”

He said grain prices have now probably peaked but the current high prices are likely to remain until at least the middle of next year. US farmgate milk prices have increased by around 30% since early June.

“Futures markets say milk prices will hold at current levels for the rest of this year and much of next year,” said Prof Young. “The growth in milk production at the beginning of this year has now stopped and milk supply may be down next year, which will further help keep prices up.”

He said the forthcoming Farm Bill, which is the US support system for farming, is the subject of intense debate at present. Of the $90bn (€72bn) spent under the Farm Bill in 2011, around 75% was devoted to the Supplemental Nutrition Assistance Programme.