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The big picture

Agriculture.com Staff 10/17/2008 @ 11:47am

This past week, the commodity and stock markets took a major plunge, accelerating downward and reaching levels that, not only surprised, but shook the marketplace more so than anytime in recent history.

This year has been one of extremes, and when viewing the big picture, will probably be remembered as chaotic. It will also be remembered as a year of unbridled optimism and pessimism.

In just a few short months, the world marketplace went from inflationary concerns and dwindling supplies of hardcore commodities to deflationary or even depression talk and excess inventories. The corn market is a good example. Futures prices between $7 and $8 per bushel were too high for end users. Now, prices are trading below what it will take farmers to grow crop for next year.

Prices have a tendency to move in a trend, and often the trend accelerates as it reaches a top or a bottom. Just three months ago many thought corn would rally to $10 and beans $20. Recent economic turmoil has many feeling that the world is nearly ready to end, and you should sell everything. For many commodity users, this should be a key sign to buy soon, maybe aggressively.

The biggest surprise this year may be how markets have reached extremes on both ends of the spectrum in such a short window of time. Typically, bull markets have long tails. In reality, it is likely that all markets will find a middle ground, and commodity prices will eventually move back into a range which more closely reflects supply and demand rather than the perception of no supply/inflation or too much supply/deflation. The big picture, in time, will likely reflect markets do not go up or down forever.

If you have comments or questions, call Top Farmer at 1-800-TOP-FARM ext. 129 and ask for Bryan Doherty.

This past week, the commodity and stock markets took a major plunge, accelerating downward and reaching levels that, not only surprised, but shook the marketplace more so than anytime in recent history.

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