By Jennifer Dorsett
Field Editor

Commodity prices have continued to take a hit in the wake of the coronavirus pandemic despite unprecedented consumer spending at grocery stores across the nation.

American Farm Bureau Federation (AFBF) Economist John Newton said retail prices are increasing as stores continually sell out of food and other essential items, but that isn’t being reflected in the milk, live cattle or hog markets.

Class III milk prices are down 11 percent, according to Newton. Class IV milk, which is used to produce nonfat dry milk powders, is down 22 percent. He said Class IV has taken a larger hit, because much of the powdered milk produced in the U.S. is exported.

“Every single major agricultural commodity has seen their prices take a downturn. Hogs and live cattle were down as much as 30 percent,” he told Brownfield Ag News. “When you see retail prices surge, but farm prices don’t move or move even lower, that means the margins are being captured somewhere else along the supply chain, which can be pretty frustrating.”

It’s an unfortunate case of supply and demand dynamics, Newton explained. Grocers are bidding up prices to keep retail shelves stocked while concern over the possibility of meat packers shutting down has cattle markets moving in the opposite direction.

“But make no mistake, those big margins are being captured elsewhere along the supply chain and not being captured by the farmers themselves,” he said.

Newton noted even amid their own struggles, farmers and ranchers remain committed to growing crops and raising livestock.

Food and fuel processing facilities are critical components of the U.S. economy, he added. The national farm organization also called for the FMCSA Emergency Declaration waiver to hours of service for food transportation be expanded to address the entries agricultural supply chain.

“We hope this turns around pretty quickly, but the important thing is to get food in the hands of people who need it and to keep the products moving,” he said. “We’ve got the food supply. It’s just making sure all the other links in the very complex U.S. supply chain remain intact.”

For more on market prices, visit AFBF’s Market Intel page.