Impact of New Government Interference With Speculation on Commodity Prices

from Farm Futures' writers Bryce Knorr and Arlan Suderman. I think these guys are suggesting that we should expect short-term lower prices, but long-term higher prices due to shortages:

A rally in the greenback from this point can't be ruled out, but current government fiscal policy would still suggest that the long-term risk remains to the downside. That's what index fund managers are banking on as they continue to build ownership of hard assets. Yet, the short-term picture of a low-inflation threat, rising financial markets, bearish chart signals and favorable Midwest crop weather supports active selling by the trend following hedge funds.

Such was the case once again today, with corn quickly taking out last December's low and wheat feeling additional pressure from CFTC efforts to put position limits on the index funds. Ironically, the long-term impact of CFTC's attempts to bring about convergence between the cash and the futures market would likely be to reduce insurance revenue guarantees, which would be expected to reduce planted acreage and eventually reduce the supply of food-based commodities. I break down data on hedge and index fund ownership and its impact on prices later in this commentary.