Sunday, January 14, 2007

Farm Country is Abuzz with Corn Prices

Peter J. Kordell, President, Slipka Financial Partners who has been trading commodities for 38 years writes an article where he says the conditions could be right for an all time high on corn prices, comparing it to the all time soybean high in 1973.

I started trading commodities in 1968. During my 38 year career in the futures industry, I have witnessed or participated in every all-time high of every futures market currently trading. One thing I have learned about markets that are making new all-time record highs is that there comes a tipping point when frenzied buyers forget about fundamentals and rational pricing. Prices rise to record highs on emotions and not on sound reasoning.
These kinds of prices will have dramatic effects in the country side, most likely affecting land prices, feed prices, purchasing decisions for equipment, etc. Most landowners have also trended towards cash rent arrangements vs share cropping, could this also be changing? Is it possible that another golden age for American Agriculture is underway?

Farmers have been working towards this kind of market for 3 decades or more. Will this be sustainable or simply a spike in the market that will be talked about in the future "as the good old days".

At this point only time will tell, let's hope this is a turning point for agriculture

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