A recent webinar produced by Purdue University addressed the topic of supply-demand balances for corn & beans and how that balance will affect the agriculture community. (Note: A video to the full webinar has been embedded below and the presentation slide can be found here). The two hosts, Professors Mike Boehlje & Chris Hurt, discuss a number of topics relating to supply and demand of corn and beans. Their view – the tremendous growth that we have seen in Ethanol and exports will slow and flatten. They don’t predict a collapse, but a slowing of what we have been seeing. With regards to exports, a slowing of income growth in China as well as other counties (especially those in South America) will play the main role in the slowed growth. Regarding the supply side of commodities, with the slow planting season this spring (and now summer) the ending supply stocks don’t appear to be gaining much ground over where we ended 2012 at. Boehlje & Hurt stated that both corn and beans appear to be in a holding pattern, which should keep commodity prices propped up for the near-term.
How will the fluctuations in supply & demand affect land prices? Similar to the demand for corn & beans, the webinar hosts don’t see a major collapse on the horizon. What they do think is possible is more of a “flattening out” of demand for farmland. If, as mentioned above, growth in demand for commodities does slow down, the result will more than likely be a similar slow down in commodity prices. Another factor that Boehlje & Hurt mention are interest rates. Will they continue their rise? If so, that will also affect what a buyer can afford to spend on farmland. That being said, neither were confident in predicting a large decrease in farmland prices in the short-term.