Today's record 936 point run-up in the Dow Jones industrial average, and comparable advances in Standard and Poors and the other indices, should spill over into ag commodity prices and lift some of the gloom from the nation's farmlands.
A rising tide lifts all boats, and now that the markets have finally bought into the U.S. and G-8 actions to bolster the world's credit and banking systems, it should rub off on livestock and grain prices.
Agriculture, for better or worse, is a credit-based, credit-dependent business. Lack of confidence in the banking system hits at its foundations quickly. A recessionary economy leads to reduced consumer spending, so the gloom leads commodity traders to drive down futures prices. This impacts the cash market, so farmers and ranchers take it in the pocketbook.
It remains to be seen whether this is a new trend or a one-day bounce, but is strong enough that it should signal a recovery of some magnitude. This is critical in the busy fall harvest, when livestock and crops are coming in out of the fields and on to the market. It's a once-a-year payday for many in agriculture, and a narrow window at that.
For the first time in two weeks, there is at least some reason for optimism.
No comments:
Post a Comment