“Ups and Downs” Expected for Grain Markets

Farmers hoping for some consistency in the grain markets for the remainder of the year may be disappointed.

During a presentation at this year’s Farm Science Review, ag economist Dr. Matt Roberts told attendees to expect a tremendous amount of volatility during the upcoming months. He also emphasized that anyone involved in the commodity market should keep his or her attention on just about everything.

Many factors can affect whether the markets go up or down, including the state of the harvest, late planting, conditions at pollination, weather and one that you may not expect — world events.

Roberts said that it is estimated that there is a one in three or one in two chance that the U.S. could slip into another recession because of world events. He also stated that the Greek debt crisis is a contributing factor to the inconsistency of the grain markets and that if the global economy slips back into a recession, then the demand for grain and prices could decrease.

According to a Farm and Dairy article, German and European banks are some of the largest holders of the Greek debt and if they are not able to balance their books, then the residents in these countries could be affected. This would mean cutbacks in their budgets and more specifically, there could be less livestock to feed and therefore less grain needed.

This notion also holds true for China. If the European Union and the United States slip into a recession, it could mean that China may need less grain because its economy may not grow as quickly as it does today. This may mean fewer Chinese consumers would be able to afford the quality of food that they have now, which would mean less grain for livestock and possibly less soybeans for the rest of their diet.

There is some positive news that farmers can take from this — When there are economic doubts worldwide, people still lean toward America.

“When things go sideways in the world, people still put their trust in the U.S.,” said Roberts.

It will be interesting to see what the future holds for the grain markets. What do you think about the outlook for the remainder of the year? Will it affect you directly or do you know a farmer(s) who may be impacted by it?

Photo obtained from: oklahomafarmreport.com