The really good times came in 2022 when the price of corn averaged $6.54 a bushel and soybeans $14.20. University of Illinois agricultural economist Gary Schnitkey says both numbers are way above what the University of Illinois has shown to be the current era’s long-term plateau prices of $4.55 and $11.00.

“Whenever we’ve had sort of a price period above those long-run plateaus, it’s attributed to either a demand shock that doesn’t persist or some sort of supply shock. Now we’re likely entering a period where we don’t see demand increases, or at least we can’t anticipate them, and our supplies look adequate.”

The other thing of note is that these supply shocks or shifting demand curves, which have caused rapid price increases in the past, have tended not to last very long – on average, two to three years. The in-between times, which pull the average cash prices down, last much longer, usually something in the order of seven to eight years, with prices below the average price plateaus. Entering those below-average price periods is when Gary Schnitkey says farmers use cash reserves from the very good times to stabilize their farm business operations.

“Yeah, we call this thoughtful use of financial resources. Essentially, we’ve built financial resources during that high price period, and now we either have to use those to weather what’s coming up or, for some farmers, this is going to be a time to make investments that pay off in the long run. And so, you know, thinking about those things in the long run and realizing that we could see another longer period of low returns is the norm for agriculture, I guess. Yeah, we’ve entered that period. It would appear to me that we’ve entered that period again. I could be surprised, and we could have higher prices this year, but for that to happen is pretty unpredictable.”

You may learn more about high and low-price eras in the agricultural marketplace on FarmDocDaily.