Watching MacroEconomic Trends
The commodity markets were closed yesterday for the Martin Luther King Jr. Holiday. So rather than give you updates on last week’s prices, we will visit with Rabobank AgriFinance Food and Agribusiness Research Advisory Senior Vice President Sterling Liddell about several macroeconomic trends to be watching that will most certainly have an effect on future commodity prices.
Liddell: “This is an interesting year. There is a couple of things — first of all with the commodity markets this year, we are very concerned about macroeconomic conditions. There are signs of China slowing down. Europe looks like it is back on the whole austerity brinkmanship issue. And we still have Russia out there that is having issues. and that has implications for both the corn and the wheat markets long-term. Russia and Ukraine with the currencies really falling completely apart. With the Russian currency down about 45 percent they’ve had a hard time buying the inputs or capitalizing the cost of this crop — so buying inputs to put on this crop. So we are likely to see some downward movement in yields and production in these countries.”
The strengthening of the U.S. dollar and record low oil prices are two other macroeconomic elements to consider
Liddell: “Those things are all developing and will compound to have issues over the macroeconomy and that will have an impact on what we can export and challenges with exports — especially as the dollar gets stronger against competitive currencies.”