Expert: Gina Boykin - 11/27/2008

Question
Hello:

This question my be outside of your expertise, but perhaps you may have the answer.

What do the grain future prices represent or indicate?
For example corn may be 456.87, soybeans 345.88, and wheat may be 456.34. These are just example prices. Normally, I hear individuals in the agriculture business talk about grain prices in price per bushel.

I thank you for your reply.

Answer
I'm definitely not an expert on this subject, but I'll share what I do know.

The prices are cents per bushel.  

Just like stock prices that represent the expectations for the company, grain future prices represent expectations for the product (what the supply and demand will be).  These prices can be effected by a number of factors, including environmental factors(storms that destroy farms eliminate new supply, causing the stored grains to have to be rationed out over a longer period) and economic factors (increased demand for ethanol as an alternative to gasoline, for example, raises the price for corn and sugarcane).

I hope this helps.