Del.icio.us  Digg  facebook  MySpace  Twitter  Google  Bookmark Me  LinkedIn  StumbleUpon  Permalink

Not Much Effect from Economic Slowdown for Farm Prices

According to Joe Glauber, USDA's Chief Economist, evidence from the past suggests that a significant U.S. economic slowdown would have small effects on farm product prices. Grain markets have gone down substantially this week, supposedly on concerns about the economy, but Glauber says not to worry.

"I think what you may be seeing there is more technical trading effects of some fund managers who are moving money out of equities into commodities or out of commodities into cover positions and equities," Glauber says. "Those should be short run. In the long run the underlying market fundamentals are what's going to be important in commodity markets."

Glauber says an economic slowdown doesn't really affect those fundamentals in the U.S. In lower income countries you do see a drop-off of red meat and poultry consumption which could lower U.S. export expectations, but that's only if the slowdown expands worldwide.