After a wild, panicked and euphoric week in the world’s stock markets, farmers might wonder what it means for crop and livestock prices.It’s a question traders and market analysts grappled with as each day brought another explosive move in the world’s equity markets. Problems in Greece and the Mediterranean were exacerbated by technical problems in New York and then relieved by political developments in the European Union in a week that made market history.”Even though we’ve had a rebound, the fear level is only going to go up, not down, after this,” said Union Securities broker Ken Ball on May 6, the day the Dow Jones Industrial Average plunged almost 1,000 points and then quickly recovered 600 points.Extreme volatility after months of relatively calm markets is likely to rattle investors everywhere, Ball said.As anxiety over Greece’s possible slide into bankruptcy grew and concerns of “contagion” to other countries built, agricultural prices got sucked in. During the May 6 slump, soybean futures prices fell more than 30 cents per bushel. Canola futures fell during the three days of turmoil by about 18 cents per bu. on the Winnipeg ICE Futures Canada contract.But grains and meat prices did not slump as much.Errol Anderson of ProMarket Communications said he thinks wheat and other grain prices will stay firm even if the market does sell off more.”It’ll have little impact because the grains have already washed out,” said Anderson.Many farmers’ memories are scarred by the simultaneous collapse of commodity and stock prices in the 2008 meltdown. The Greek problems and their contagious effect in stock markets do not seem to be automatically governing agricultural markets.Joe Victor of Allendale Inc. of McHenry, Ill., said he believes the equity market gyrations won’t kill hopes for a continued and improved spring rally.”Seasonalities will still count until we’ve got this crop all in and it’s pollinated,” said Victor, who focuses on Midwest U.S. corn, soybeans and wheat crops.He said the European Union’s $1 trillion package to stop Greece and other countries like Portugal and Spain from becoming bankrupt will stop the world market panic and help maintain demand for crops and meat.”Is Greece healing good for ag? Yeah, it is,” said Victor.But Anderson said the lingering worries created by the market tempest will mute the ability of grain and oilseed prices to go much higher this spring. The best that can be hoped for is moderate gains, he said.Victor said soybeans were particularly hard hit during the May 6 selloff because that was where investment funds were most heavily involved and weakening world demand hits oilseeds harder than grains.He thinks canola and soybeans can recover if the sudden drop in prices brought buyers to the market.Anderson said panic selling hammers crop commodity prices, but also lowers the value of the Canadian dollar, so Canadian farmers get slightly cushioned from the full effect of the market storm.From May 3 to May 10, the Canadian dollar went from about 99 cents down to 93 cents and then back to almost 98 cents in intraday trade May 6, following the path of the equity markets and oil prices.Anderson said the combination of a weaker dollar and already weak crop prices mean that farmers should not expect to see much lower prices this spring, unless the equity markets go into a tailspin.”The grains are bottoming and the loonie will struggle to go above parity for a while,” Anderson said.
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