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Crop, livestock prices plunge under weight of COVID-19 uncertainty

Crop, livestock prices plunge under weight of COVID-19 uncertainty
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An updated analysis by the American Farm Bureau Federation shows crop and livestock prices falling to levels that threaten the livelihoods of many U.S. farmers and ranchers. Shuttered schools, universities, restaurants, bars and cafeterias are no longer buying milk, meat, fruits, vegetables and other food, causing a downward spiral in crop and livestock prices.

Nearby futures prices for nearly all the major crops have dropped by double-digit percentages. Pushed down by a 40% plunge in ethanol prices, corn prices have fallen 15%.  Soybean prices are down 10%, while the price for cotton, which is heavily dependent on foreign manufacturing capacity, sank nearly 30%. Buoyed by demand in the U.S. and China, wheat prices have declined only 3%.

On the livestock front, since the beginning of the year, both beef and pork futures prices have declined more than 30%. Milk futures prices have also fallen sharply, with the price for milk used to make cheese down 28% and the price for milk used to make nonfat dry milk falling by 34%.

“The resilience of farmers and ranchers has been nothing short of stunning, but we must not take for granted their ability to hold on with prices spiraling, taking all hope of breaking even with them,” said AFBF President Zippy Duvall. “I stand by my assurance that our food supply remains strong, but America will have fewer farms and ranches supplying it unless USDA acts quickly to deliver aid and our economy is released from the grips of this pandemic soon.”

Dr. John Newton, American Farm Bureau Federation chief economist, said, “The drop in demand is pushing the prices farmers would get paid for their crops to lows that may make it very difficult for them to justify putting another crop in the ground this spring. While the whole country is optimistic there is an end in sight, the question of when the economy will be healthy again is fueling further market uncertainty.”

“It’s worth noting that these prices are in no way tied to what shoppers pay in the grocery store. There are a lot of hands through which these commodities pass from the farm to the fork, so a drop in prices paid to farmers very rarely, if ever, translates into lower consumer prices immediately,” Newton explained.

For more detailed information about futures prices, see this Market Intel article.

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