Prices of corn, soybeans, and wheat started moving higher in the fall of 2006 and have remained generally high and well above average prices in the previous 30 years. These higher prices, and the volatility associated with the higher prices, have resulted in the kind of uncertainty reflected in the quote above. Are higher prices here to stay? If so, what is the expected level and variability of prices during the new era? From a producer’s standpoint, the question really is, “What is a good price for corn, soybeans and wheat?” These questions cannot be answered with certainty, but unfolding evidence suggests that prices are indeed likely establishing a higher average than that experienced in recent history. The factors supporting this conclusion include generally tight world inventories, growing world demand for food and biofuels, and escalating costs of production (e.g., Trostle 2008).
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