The grain and livestock markets are rebounding during Monday’s trading session. That’s after a rough day when prices dropped Friday after oil prices rose sharply.
The increase came after U.S. forces in Iraq killed a top Iranian general. The price of oil surged more than 3.5% on Friday.
Analysts say the drop was a surprise the market wasn’t anticipating as the focus was on the trade agreement between the U.S. and China.
“We were going to get to January 15 and sign Phase 1,” says Chip Flory, AgriTalk radio host. “We were going to get the Senate back and vote on USMCA and get that ratified. The concern is the black swan has already been identified and that’s Iran.”
Flory says the risk is if the conflict with Iran intensifies and the U.S. sees a disruption of crude oil flowing out of the Middle East.
Chip Flory says, “If that happens, you’ll see higher energy prices, higher energy prices are going to make our inputs more expensive, not just fuel but all of the inputs more expensive when you get to 2020.”
Analysts warn those increases could potentially drag on the global economy at a time when it is already slowing.