Tuesday, September 23, 2008

How will financial changes affect Farming?

The unprecedented bailout of Wall Street by Uncle Sam has every industry considering how it is going to affect them. Many analysts think that agriculture will only be mildly affected by these changes, but will feel the impact none the less:

Jason Ward with Northstar Commodity Investment Co., says the financial crisis affects the U.S. farmer directly and indirectly.

"AIG especially is a large player in the ag sector and their spiraling is causing widespread commodity liquidation," Ward says. "Banks are tightening credit with everyone, which directly tightens credit at ag banks, so end-users wanting to buy commodities ahead (like a livestock producer wanting to buy corn) simply cannot get the credit necessary to do so because his bank is tight.

It's a good thing the 2008 farm bill has already been passed, or agriculture may have faced more pressure to face further reductions

Farm Journal's John Phipps weighs in on the crisis with his thoughts:

Agriculture will not go unscathed in financial crisis, although my investigations lead me to suspect the consequences are not immediately obvious. After reading reams of stuff about what the heck is going on in Washington and New York, maybe these links and guesses will help.

Bryce Knorr from FarmFutures:

With the panic in the financial markets beginning to subside, traders are again turning their attention to the size of the 2008 crop and the potential for very tight supplies into 2009. Rains this week are expected to focus on the northwestern Corn Belt, with little moisture making it into the rest of the region. Warm temperatures should promote maturity and drying, with frost not showing up until the first week in October, at the earliest. Weather models continue to disagree on the cold blast, with the more accurate European model not projecting much of a threat.

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