Many market analysts look at history to predict the future. With an eye on the commodities-equities cycles, Mike Hogan of Stewart-Peterson says that the tides change every 17 to 21 years.
"Either the commodities are pulling the markets forward or equities are pulling the markets forward," Hogan explains. "Since about 2000, we’ve been in a state where commodities have been pulling the markets."
Because of this, agriculture has been the shining star of the U.S. economy—even the global economy. There can only be a couple of years left in this cycle, he says.
For farmers, Hogan says this means that volatility will continue in the near-term. "We will probably only have one more ‘wow’ type of event from a price spike standpoint," he adds. "After that, you’re on the back side of that cycle where we have another 15 to 20 years of being a little bit more mundane."
This doesn’t mean that there’s not going to be volatility. Hogan tells farmers to think about the 1970s and 1980s, then think of the mid 1980s through 1990s when commodity markets weren’t too exciting.
"Farmers have been riding high on the commodity tide," Hogan says. "A change is coming."
- November 2013