DENVER, COLORADO, US — Although corn, soybean and wheat prices declined from their recent third-quarter highs, they likely will rebound due to tight supplies and rising demand for soybean and vegetable oils use in renewable diesel fuel, according to CoBank’s most recent quarterly report on the US economy, released on Oct. 7.
The US fuel ethanol sector saw mixed performance during the past quarter as production fell but operating margins increased dramatically.
“The regulatory environment remains dynamic and US biofuel policy continues to be an area of friction between farmers, ethanol producers and fossil fuel refineries,” CoBank said. “Debate surrounding the Environmental Protection Agency’s proposed renewable fuel standard (RFS) blending volume requirements continues.”
The report described the grain export picture as “cloudy” in the short term as grain terminal operations in the US Gulf region continue to recover from Hurricane Ida.
The report described the overall US economy as being “on a strong growth path,” but it continues to be plagued by supply chain issues. The report said supply chains are arguably in the most dire condition since the start of the COVID-19 pandemic in early 2020, as lead times for manufacturing inputs recently reached record highs. Persistent supply chain disruptions and labor shortages are adding significant costs to business operations, and consumers will feel these effects through higher prices for months to come.
“Supply chain snarls are likely to persist well into 2022, and so will elevated inflation,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange division. “The latest producer price index data for August was up 20% year-over-year, while the consumer price index increased just 5.2%. So, it’s clear that many businesses are passing only a small portion of those cost increases on to the final consumer. We expect that will change in the months ahead and many businesses will raise prices.”