Ron Sterk

The message from most presenters at the 40th annual Sosland Purchasing Seminar held in Kansas City June 4-6 was that prices of most ingredients have some but not robust upside potential this year and next because of ample supplies, albeit declining in some cases, both domestically and globally. While there were exceptions, most notably sugar, ingredient buyers generally received good news about the prices they may pay over the next several months.

That includes such basic commodities as wheat, corn and soybeans, as well as other ingredients such as cocoa and eggs.

Speakers at the Purchasing Seminar noted a myriad of factors that may affect ingredient prices in the coming year. Notable was the current trend in the value of the U.S. dollar which, though volatile and still historically high, appears to be in a downtrend so far in 2017. A weaker dollar tends to be positive for exports of U.S. commodities as they become more competitive on the world market relative to other currencies. That, combined with globally lower exportable supplies of key commodities, including wheat, may bode well for U.S. grain exports, although speakers also predicted ongoing stiff export competition for corn and soybeans from large crops in South America.

Political factors also were noted, including biofuels credits that could have a significant impact on soybean oil demand, trade issues involving sugar with Mexico, dairy with Canada and the much broader renegotiation of the North American Free Trade Agreement, and work on a new farm bill for 2018 in view of proposed sharp reductions in funding for agriculture.

Bill Lapp, Advanced Economic Solutions
Bill Lapp, president of Advanced Economic Solutions, told Purchasing Seminar attendees in the opening session that wheat futures have greater upside than downside price potential in the coming months.