During the last half of the 20th Century, crop, and animal and animal product prices increased less than average US prices except early in the high inflation of 1973-1982, said Carl Zulauf, environmental and development economist at Ohio State University and Gary Schnitkey, agricultural economist at the University of Illinois, in a release published by the University of Illinois’ farmdoc.daily.
Since then, in the 21st Century, farm prices have increased more than average US prices, Zulauf and Schnitkey said. This change coincides with a gap that emerged as consumption grew faster than yields of food grains, feed grains and oilseeds.
The gap, which has increased over time, suggests farm prices likely will increase as fast as average US inflation for some time into the future, the economists said.
USDA, LABOR STATISTICS DATA USED
The USDA compiles an index of prices paid for all crops and all animals and animal products sold in the US, the report said. The US Bureau of Labor Statistics compiles the Producer Price Index and Consumer Price Index. The PPI is a family of indices that measures prices paid to domestic producers for domestic production by all goods-producing sectors of the US economy (mining, manufacturing, agriculture, fishing and forestry), as well as for domestic output of the US natural gas, electricity and construction sectors.
The CPI measures prices paid by domestic consumers, they said.
The analysis period was 1953 to 2022, the release said. Starting with 1953, it allows time for post-World War II adjustments in the US economy, the economists said. Annual data were used. For 2022, an average of data released so far was used.
FARM VS. PRODUCER PRICES
The ratio of prices received by US farmers for crops and animals to the all-sector PPI index was computed to examine relative change in farm prices to all US producer prices, they said. The highest ratio over the study period was 1.80 in 1974 for crops and 2.13 for animals and animal products in 1973.
Both ratios then declined sharply through the early 1980s, the study found. The decline continued, but more slowly, until the early 2000s.
Overall, during the last half of the 20th Century, farm prices increased less than the average of all US prices, the economists said. Thus, farm prices generally moderated US producer price inflation.
However, during the 21st Century, both farm-to-PPI ratios moved erratically with no obvious trend, they said. Crop and livestock prices have increased the most, with producer prices increasing more than consumer prices.
The implication is that farm prices likely put an upward push on average consumer price inflation in the 21st Century, they said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $155.57 to $157.50 per cwt, compared with last week’s range of $154.80 to $160.00. FOB dressed steers, and heifers went for $244.42 to $247.08 per cwt, versus $244.52 to $249.16.
The USDA choice cutout Wednesday was down $1.02 per cwt at $265.07 while select was down $0.14 at $252.78. The choice/select spread narrowed to $12.29 from $13.17 with 86 loads of fabricated product and 35 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.65 to $1.80 a bushel over the Mar corn contract. Bids in Kansas were down $0.10 at $0.75 over Mar, which settled at $6.81 a bushel, up $0.01 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $180.37 per cwt, down $0.05. This compares with Wednesday’s Mar contract settlement of $183.25 per cwt, down $2.90.