As a new year begins, it’s instructive to reflect on what we learned about commodity markets in 2015. Several unexpected turns made it a year to remember—or, in some cases, forget—as supply gluts and demand challenges kept prices low.
“The focus was largely on supply this year,” says Mike North, Commodity Risk Management Group, in an interview with “AgDay” host Clinton Griffiths. “We talked from the grain side about this big world supply and it kept prices very subdued. When we thought that was threatened by all of the wetness in the Midwest, we got our one and only big rally of the year, and the moment we realized that things were all right, we went right back to where things came from and just toed the line.”
Conversely, several macroeconomic factors contributed to the weak price environment, adds Mark Gold, Top Third Ag Marketing.
“We had a very strong dollar,” Gold says. “We saw Chinese buying back off significantly. A lot of concerns about the Chinese economy. A lot of concerns about the European economies. We’ve had some financial implications into these markets that I think helped push or exaggerate the moves of the big supply. We could have handled some bigger demand if supply had stayed pretty much the same, but it didn’t.”
In particular, the strength of the dollar and the economic weakness of China should catch farmers’ eyes, Gold says.
“Those are the things that I’d be taking away hoping to see something change next year,” he says. “What we learned last year was we can have big crops even with a poor start. Hopefully, we’ll see some kind of price recovery in 2016.”
Click the play button below to watch the complete interview with North and Gold on “AgDay.”