Some Perspective On the Grain Markets

I read this wrap-up this evening by Arlan Suderman, market analyst for Farm Futures:

"The current break in the corn market would seem unprecedented to the casual observer, suggesting that the commodity bubble had finally been broken...

"A scenario can be constructed that would suggest that the multi-year highs are behind us, but such a scenario is still not the likely one, based on overall global dynamics.

"The more important take-home message is that you can’t judge the long-term direction of the markets based on short-term rhetoric. Last year’s “collapse” was accompanied by equally bearish talk and followed by the strongest bull-run in history. Prices more than doubled over the next nine months. In fact, the nearby corn contract doubled in value in the subsequent rally in each of the past two years. A doubling in value is not expected this year, but we should see prices stabilize and strengthen again to reflect overall global dynamics that are still pretty solid."

Arlan's complete daily commentary can be found here:

Farm Futures

I also found it interesting that corn prices dropped by about the same amount two years ago, while electronic trading of grains was still in its infancy, before trading volumes reached high levels, and prior to the current commodity boom. This also puts a fresh perspective on the idea of a commodity bubble and also on the idea of speculators driving the commodity markets. Arlan's perspective casts serious doubt on both, and suggests that both the bubble and the influence of speculators are both myths.
In our modern society, we would hardly like to admit it, but sometimes we behave in ways that are almost as superstitious and irrational as if we lived in the dark ages. With our elitist attitudes, we tend ot think that in this day we are more enlightened. I suggest that we are probably only more proud.