Market affects farmers
Published 12:00 am Monday, September 29, 2008
NATCHEZ — Though the commodities markets moved little last week, the current financial uncertainty of some banks may have an effect on commodity prices.
“The primary concern in the market is that credit markets might seize up, and with that the ability to borrow goes away, not just for businesses that are sub-prime,” agriculture economist John Anderson said.
If the market reaches crisis levels and credit is frozen, there could be problems with “major end users” such as millers buying wheat being able to make purchases, which would send ripple effects through the market, Anderson said.
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But even on a more mundane level, the market will probably see some credit tightening.
“It is very likely we will see credit curtailed to some degree, and that is something that farmers are concerned about because we are in the time of year when farmers are thinking about what they are going to plant and when they are heading to banks to get production loans,” Anderson said.
In general terms, the commodities markets didn’t move a lot last week, but for the last 12 to 18 months they have been fairly volatile — including corn moving up double digits one day and down double digits the next.
“The market is having a little trouble findings its bearings in all of this uncertainty,” Anderson said. “Right now it’s a lot of wait and see.”
Most of the commodity market fluctuations right now, however, are because most crops are behind because of the weather this planting season, Anderson said.
“The market is watching that development, and we will start to get a better feel for national yields in the next couple of days,” he said. “That’s pretty typical for this time of year.”