10/07/08 General financial woes and the ag economy

Farm and Ranch October 7, 2008 U.S. stocks continued to plunge Monday as did commodity futures. Foreign exchanges saw similar declines. Europe is now bailing out banks. What does it mean for the U.S. agricultural economy? Cornell agricultural economist Brent Gloy says that depends on whether or not the U.S. has a recession that spreads overseas. Gloy: "As the credit market turmoil plays out it has the potential to slow demand for all kinds of commodities both in the U.S. but more importantly worldwide. And if the credit crisis results in a worldwide economic slowdown I think there are some storm clouds on the horizon for commodity demand." Many commodity analysts are now saying that the global equity market drop is further evidence that there is a sustained economic downturn ahead despite governmental actions. Crude oil's drop below $90 a barrel Monday was said to be based on concerns of an economic slowdown which will reduce demand for petroleum. Despite the financial problems in the United States the dollar is still seen as a safe investment compared to other alternatives and it was stronger Monday. Increasing strength in the dollar is viewed as negative for ag exports. As for credit availability for farmers and ranchers, the consensus at this point is that it may cost more but there shouldn't be a problem for most producers unless they are highly leveraged. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.