Play Turner's Take Ag Marketing Podcast Episode 311

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New Podcast

In this week's episode we ask the question how will inflation change trading ranges in the ag markets once we go back to adequate and burdensome stocks.  Will we see $3.00 corn again or $4.00 wheat?  How about $8 soybeans or $400 canola?  We take a look at what inflation did to commodity prices in the 1970s and how they never did go back to the old ranges from the 1960s.  Make sure you take a listen to the latest Turner's Take Podcast!

Inflation & Ag Market Lows

Below is a 60 year chart of corn.  In the 1960s corn traded between $1 and $2 a bushel.  The period of rapid inflation started in 1972 and did not end until the early 1980s.  While many factors were blamed, inflation usually is a product of easy money for a prolonged period of time combined with massive spending deficits.

From 1972 to 2007 corn generally traded between $2 and $4 a bushel.  In 2007 the market changed due to a combination of the Renewable Fuels Standard (RFS) program plus the emergence of China as a major buyer of all commodities.  A new trading range was formed and corn would traded between $3 and $4.50 when stocks were adequate to burdensome. When stocks were tight, corn could trade between $4.50 and $8.00

We are now in a new period of inflation.  The latest CPI reading for the US has inflation up 8.3% since last April.  Canada's latest inflation reading came in at 6.8%.  No one thinks inflation will stop anytime soon and Central Banks have a long way to go with raising interest rates.  The question we have been asking is, when inflation is finally brought under control, what will be the new trading range for the Ag markets?

For now we can only guess.  We will not know for sure until the we have a period of adequate to burdensome stocks of corn, soybeans and wheat.  I don't see that happening for at least a full crop cycle.  Soybeans have a chance for adequate stocks is S. America have a big crop next season.  For corn and wheat it could be longer depending on what happens with Ukraine.  This will be a topic we will continue to revisit as inflation rages on. Stay tuned!

About Turner's Take Podcast and Newsletter

If you are having trouble listening to the podcast, please click here for Turner's Take Podcast episodes! Craig Turner - Commodity Futures Broker 312-706-7610 [email protected] Turner's Take Ag Marketing: https://www.turnerstakeag.com Twitter: @Turners_Take Contact Craig Turner