10/16/07 USDA economist says this is peak for grain prices

Farm and Ranch October 16, 2007 Many analysts believe the record to near record prices grains have reached this year have no where to go but down in 2008. USDA chief economist Keith Collins says this season we have seen constrained world crop production with major growth in demand. Collins: "So we are at the peak of the cycle right now. As we look forward we would expect the high prices will generate more acreage planted around the world. We would expect normal weather to generate more yield per acre and therefore more production around the world. And with the high prices and low margins we are now seeing in the biofuels industry we might expect a little bit slower growth in biofuel demand. So as we look forward to next year we would expect some of these markets to adjust." Collins cites wheat as an example. Collins: "We are going to see much more wheat planted this fall and if we get better than normal weather around the world we should see wheat prices pull back some, and we are already seeing that in the futures market." In the futures market old crop Chicago May wheat for example is just over $8 a bushel while the new crop July contract is only 6-71. Washington is the biggest wheat producing state in the Pacific Northwest and its Wheat Commission Chairman Randy Suess says fellow commissioners don't expect any dramatic acreage increase. Suess: "I don't think so. Everybody that represents their district said oh there is going to be some slight changes but I don't see people really throwing off what they have done for their rotations for a long period of time dramatically. I think we will some though to a small extent." I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.