The Outlook of Agricultural Commodities


Overview and Introduction:

Agricultural commodities are important, both in terms of the basic human need for food as well as the importance of such commodities to world markets.
Often, a wide variety of factors influence the economic outlook of agricultural commodities. For instance, while crops like soybeans and wheat may have experienced slight decreases in production, their popularity is not decreasing. The soybean decrease is indirectly attributable to changes in ethanol production, exports, and energy prices. As increases in ethanol occur, production and devoted acreage shifts in favor of corn because it is in higher demand; since crops compete for acre space the increase in one crop likely results in the decrease of another. Similarly, while advances in genetic modification of soybeans and corn have led to growths in those industries, the acres devoted to wheat fields are being compromised. Thus, when changes occur with regards to agricultural commodities, one must ask is the popularity of the good decreasing, or are confounding variables affecting production?

Economy is a balance between supply and demand, with factors emerging at all angles. In order to gain a full understanding of an agricultural commodity's economic affect and outlook, it is often necessary to examine specific crops individually. For the purposes of this project we have addressed some the most popular crops including:

Orange Juice
The majority of economic forecasts seem to signal that consumption and production of the orange juice commodity is slowing and will continue to do so, both in the U.S. and abroad. - orange juice

Although the industry's growth has seemed to plateau over the past decade, the US produces around 75 million metric tons of soybeans each year. - soybeans

As of today, potatoes are the leading vegetable crop in the U.S. (excluding sweet potatoes) contributing to around 15% of farm sales. - potatoes

In the United States, corn is the largest crop, with the domestic crop totaling a number just shy of 67 billion in 2010. - corn

For nearly 100 years, from about 1870 to 1970, wheat consumption per capita has decreased as a result of the reduction of manua labor trends as well as the diversification of modern diets. However, since the 1970's, wheat has rebounded thanks to the recognition of its health benefits as well as marketing strategies, by companies within the industry, to promote wheat-based food products. - wheat

The Avaliable Information:

The United States Department of Agriculture is a valuable source of information regarding popular agricultural commodities. It's World Agricultural Outlook Board releases the World Agricultural Supply and Demand Estimates annually, a report that itemizes economic expectations for many of these commodities. Additional information that aids in examining economic trends and the outlook for numerous agricultural products is the Consumer Price Index (CPI). The CPI is released by the Bureau of Labor Statistics (BLS) and produces monthly data including changes in the prices paid by consumers for a representative basket of goods and services.

CPI reports, along with the USDA releases, can be used to predict market changes within agricultural industries; therefore, sources from both have been used to understand each of the previous five crops placement in our economy as a agricultural commodity. Supply and demand analysis is also frequently done when examining the economic impact of a good or service; within each of the subpages supply and demand with regards to the individual crop is addressed. Lastly, as previously stated there is never a single factor that affects the supply and demand of a good; therefore, confounding variables that could have affect the examined trends are also note when necessary.

´╗┐Conclusion: What's next for the plant crop?

An important issue facing agricultural commodities is the increased demand for frozen products. With this increase in demand, a higher percentage of a farm's crops are sold to frozen food giants. With current weather issues facing the five researched crops, a new threat arrises in our food market. If farmers have such a high demand from frozen food companies, how will they be able to still stock our markets? The potato market is barely reaching its demand right now, with the orange markets also facing issues. Touching upon the traditional supply and demand trade-off, will increases in frozen food demand lead to decreases in fresh produce supply? If so, how will that affect other facets of the agricultural economy? Some food for thought...
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