RubinBrown Middle Market Food & Beverage Sector 2016 Update

Commodity Pricing: Major Field Crops

Overproduction and Excess Inventory Played a Key Role in Crop Pricing Corn prices rose in the U.S., the worlds largest producer of corn, from June 2010 to July 2013, before tapering off in late 2013. The decline in corn pricing since mid-2013 can be attributed to several factors including decreased exports for a slowing global economy, decreasing amounts of corn used in ethanol, and better weather conditions across much of the corn-producing region in the U.S. over the last couple of years – leading to greater supply. Recent dips in the price of soybeans in 2014 and 2015 were in large part due to excess inventory stemming from reduced exports of U.S. soybeans. However, producers are optimistic that as diets start to shift towards more protein based meals, the demand and thus price of soybeans will return to the higher levels seen over much of 2012 and 2013. This change in consumer eating preferences is expected to drive the soybean market, as soybeans are a major component in animal feed. Wheat prices are continuing to drop, following a trend that has been occurring since late 2012. The cause of the lower prices in recent years has been the increase in production of wheat in the U.S., resulting from mild winters in the Midwest, which has increased the amount of wheat that can be produced from the winter harvest.

Price Received – Major Field Crops

$18.0

$16.0

$14.0

$12.0

$10.0

$8.0

$6.0

$4.0

$2.0

$0.0

Corn, Grain ($ / BU)

Soyeans ($ / BU)

Wheat ($ / BU)

Source: USDA National Agricultural Statistics Service

www.RubinBrown.com

Food & Beverage Industry Sector: 2016 Update

17