Wheat board CEO Ian White just officially opened the conference by wondering aloud about what else could roil world markets, after seeing what Middle East unrest has done recently.
“We will never be able to predict the X factor,” said White about unexpected events.
“What will be that event that we can’t predict?”
White, echoing Paul Ferley’s earlier comments, noted the danger of a rapidly increasing set of commodity prices, because that would likely end up with another crash, as happened in 2008-09.
Geoff Stone, senior economist with Export Development Canada, noted the string of bubbles, crashes and crises of the past few years and made an easy prediction: “We’re in for quite a ride over the next couple of years.”
Stone has made many apologies for having little expertise in grains in particular, but has made many interesting observations about grain pricing and has a fresh perspective. He noted that unlike with metals – whose prices are also high but for which inventories are high – grain stocks are generally not high and haven’t built-up, so there is “more ground to be made up in inventories.” That means prices in grains are fundamentally stonger than in many other commodities.
He also noted that grains have an “atypical supply curve,” and that high prices don’t cure high prices in the same way they do in other commodities. In fact, high prices accelerate prices, not ration them, at least in the medium term.
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