A quick glance at today’s supply and demand situation for major agriculture commodities will leave many people to believe all is well. For the most it is, but there are lots of threats to a prosperous farm economy that we need to watch, says Greg Wagner, and independent commodity market analyst based in Chicago. Wagner spoke at the 2010 Farm Journal Media Marketing Rally
last week in St. Charles, Ill.
"Everyone looks straight ahead and sees the supply/demand balance sheet, but you have to look at the periphery," says Wagner.
Among the key domestic issues he’s watching are:
- An unresolved economic situation here in the U.S.
- Concerns about residential home mortgages
- Banks are still easily not lending money
- High consumer debt to income ratios
- High unemployment figures in the U.S.
- Unresolved issues about economic stimulation.
Couple these concerns in the overseas markets, and it might be difficult to not call Wagner a commodity bear. Wagner points to issues with China’s currency and the desire for Western governments pushing them to increase the value of the yuan. Western Europe’s continued financial woes are also reason for concern. "Our concern is any land mines that may still be out there haven’t been uncovered."
But all is not lost. So maybe Wagner is a optimistic bear, or an extremely cautious bull.
"I’m cautiously optimistic. I think fundamentals justify prices where they are. A lot depends on what happens with the dollar. How the dollar behaves over the course of the next two to three months."
Policy is also not out of the question for impacting commodity prices yet. Extension of the ethanol blenders credit tops that list.