Biofuels supporting commodity prices after bleak projections in 2020

An ag economist says demand for biofuels has added stronger price support for commodities.

Nathan Kauffman with the Kansas City Federal Reserve Bank says prior to the pandemic, commodity prices were expected to remain steady through 2022.

But, he says, that’s changed. “There are underlying sources for demand for agricultural products. That could be exports, but that could also be energy products that we’re talking about that I think put the forecast and prospects for commodity prices on a bit of different level than what we were prior to the pandemic.”

He tells Brownfield while biodiesel and ethanol have helped, there are larger contributors. “I think that it would be natural to expect that any amount of additional strength coming from demand for ethanol even at the margin that it is. It might not be the most important factor driving prices.  I think things like exports and broader economic activity matter more.”

He made his comments on a University of Nebraska-Lincoln webinar: “Post-pandemic economic forces shaping agriculture’s outlook.”

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