BEGINNING OF 2023 LOOKING STRONG
STATE OF FARMING
3 years of high grain prices historically signals that it is time for a downturn. We are currently in year three. Here are some major factors to watch that I believe will decide the future of grain prices and land prices.
- Russia/Ukraine War- What will the outcome be? How long will it last?
- Droughts around the world. •South American crop right around the corner this month.
- Strong Dollar- Our grain is more expensive to other countries because off our strong dollar.
- Goal of Deflation- Fed is trying to keep commodity prices down creating deflation and cause food prices to fall.
- US Economy- Will the rise in interest rates cause a US recession? A soft landing or hard landing for the economy? In 2008 when the stock market collapsed because of the housing bubble, it took the grain market with it that fall. I remember $7 corn during the summer of 2008 and $2 corn in the fall of 2008. All within a few months!
FINAL WORDS ABOUT THE FEDERAL RESERVE
The Fed is currently draining money out of the financial system like a vacuum buy selling bonds they had bought and accumulated throughout the past decade. This pulls money out of circulation causing interest rates to rise. Money works as lubrication to make the gears of our economy turn without ceasing up. How much lubrication do we need before the gears seize up? Could the gears seize up like in 2008 or the very start of the pandemic? That is the question with a reduced supply of money.
