How these things begin . . .

Will we get a currency/debt crisis? What happens to agriculture prices in one?

Is Turkey’s currency crisis going to spread around the world? Or is it just a local phenomenon without much impact outside its neighbourhood?

Nobody knows right now. There are some signs of “contagion,” which is what happens when one local crisis spreads to other markets like an infectious disease, with India and Argentina being hit by knock-on selloffs in their currencies as markets worry about the world’s dodgy economies.

But it hasn’t gotten out of control – yet – and it might not. This could just steam off by September.

This could be important for crop and meat prices because any worldwide currency/debt crisis would hit commodity prices and ag prices, in perhaps unpredictable ways. It’s not just the impact on the ability of overseas buyers to purchase our ag products that matters, but also the way it causes money to flow around the world economy. People can flee stocks and bonds and jump into commodities and other physical assets. Or they can flee stocks, bonds and commodities and pile into gold and the U.S. dollar.

I’m going to spend the next couple of days trying to recall what happened in the 1997 currency crisis, what happened in 2008, and how those affected ag commodities. These things tend to happen every decade or so. (Don’t take my word for it. Listen to what Clemenza says here at about the 1:00 minute mark: https://youtu.be/69IvMs–aKA)

Farmers should be paying attention to this, as busy as they are with harvest and pre-harvest. It could have a big impact on prices and returns for the next year.

Comments

Markets at a glance

Copyright © 2018. All market data is provided by Barchart Market Data Solutions. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

explore

Stories from our other publications