Once a year The Great Pumpkin arises from the pumpkin patch and distributes gifts to all the good children of the world.
Some don’t believe in him. But for those with faith comes joy in late October.
And clearly someone, and perhaps it’s the Great Pumpkin himself, is out distributing gifts to farmers right now, in the form of a lower Loonie and a higher greenback. The dollar today is trading at 93 cents, which is a bunch better than 97 cents. That makes every bushel, bag, pig and steer sold in U.S. dollars or priced on a North American basis worth a few cents or bucks more.
Unfortunately, some evildoer is also haunting farm country, knocking down crop commodity prices this week, especially wheat.
Chicago wheat has fallen from almost six dollars on the March contract to just above $5.10 today. Chicago corn has slumped by 50 cents per bushel to about $3.77 Â today. Soybeans is the toughest cookie – falling from about $10.20 to about $9.86.
This slump may continue, if Jim Rogers is right. He’s expecting commodity prices in general to weaken, he was saying on Bloomberg TV last night. That’s not a good thing, in general, because ag prices are loosely attached to the overall commodity complex.
However, Rogers – the author of the notion of the Long Term Commodity Bull Market – sees a silver lining, at least from a Canadian perspective: the U.S. dollar is likely to rise. Rogers is a long term U.S. dollar super-bear, but he thinks the time is ripe for a correction to the slump in the U.S. dollar that has occurred for the past few months. He still expects the U.S. dollar to end up in Gehenna, but only after a correction knocks both the U.S. dollar and commodities back a bit. People are now so generally bearish on the U.S. dollar that it almost can’t help but rising, Rogers thinks.
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The two factors are partially elements of the same thing. As the price of commodities falls, the value of the non-commodity-based U.S. dollar rises and the currencies of commodity-heavy countries like Canada will fall, he thinks.
So let’s hope the Great Pumpkin keeps pushing down the value of the Canadian dollar and does it at a faster rate than the Evildoer is pushing down crop prices.
