War and Weather Drive Ag Market Premiums

Iowa State University agricultural economist Chad Hart talks about some of the premiums that are going on in the commodities markets.

“It's not that we can count on it over time, but I will say it this way, the longer the conflict goes on and the more we see, let's call it the bottleneck, with an energy that means we know that those energy costs are going to stay higher for longer and longer, which lends some credence to, yeah, we can bank on a little bit of this. The other thing I'll say, though, is that when we look at, you know, putting this war premium on at basically the same time, we're putting some weather premium on, so we're getting reinforcing shots from two different factors.”

Hart adds some insight on the fundamentals of the markets when it comes to supply on both global and domestic levels.

“I think we're used to thinking of us like in the corn market, where we are the dominant market. When you think about global supplies of corn, we are basically the biggest producer, but we're pretty much the biggest user as well. And so therefore, whatever's really happening in our market sort of changed its way through the rest of the global corn market. Flip that on its head when you're talking about wheat, and I would argue we're making that change in soybeans as well. Where we're not the dominant market, we're a big player, but we're by no means the biggest player, and that means that global conditions outside the US can have a much larger influence on our market here.”

Iowa State University's Chad Hart.