“May you live in interesting times.”
It’s an ancient Chinese curse that sometimes makes people wonder: what’s so bad about interesting?
Well, for farmers living through the past 12 months, interesting has also meant enriching, delightful, frustrating and depressing.
Farmers who didn’t price their 2007 crop until the first half of this summer experienced only the enriching and delightful part, but that makes up only a small proportion of farmers.
Many sensible and prudent farm marketers priced much of their crop in late summer and fall of last year as prices much higher than they have been used to were dangled before their eyes. They didn’t want to see them snatched away.
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For them, seeing crop prices race higher and higher for months after they locked in has been annoying, enraging and darned disappointing.
This harvest season, following the sudden slide in commodity prices since late July, many farmers have held on to their crops, pricing little, not willing to part with them too soon like last year.
They have had to endure a sickening downward spiral of commodity prices that has picked up steam recently rather than slowing down.
These are indeed interesting times.
With July’s peak far behind us, it’s fair to ask: whatever happened to the idea of the long-term bull market for commodities?
Why are commodities being sucked down the same sewer that is draining the value out of the stock markets? Aren’t they supposed to go the opposite direction?
At this crucial juncture, answering the question of whether we are still in a long-term commodities bull market or have passed into a deflationary era holds the key to understanding future farm profitability.
Are farmers likely to soon return to the wonderful conditions of the winter, spring and summer of 2008 and the golden years of the 1970s, or are they headed for the crippling price collapse of 1929-30 or the agonizing low-price years of the late 1990s and early 2000s?
Over the next few weeks I’ll be writing a series of stories examining the views of some of the world’s best commodities minds on this issue. I hope it will add clarity to your decisions about how to make strategic plans.
But I warn you: from work I’ve already done on this, the best minds are coming up with opposing views on almost every aspect of this issue, so the best I can do is lay out what the best brains are thinking, and let you reach your own conclusions.
