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New leaders, private analysts estimates and Project Liberty

There’s more to the news cycle than elections. But what happened Tuesday will have an impact on agriculture. What exactly will happen as the largest shift in congressional power in half a century is ushered into new leadership in D.C.

Also this week on Market to Market…. prior to USDA estimates next week, private analysts prognosticate corn and soybean production numbers.

And by converting one man’s trash into cellulosic treasure, “Project Liberty” embraces the next generation of renewable fuels.

Those stories and market analysis with Elaine Kub.

If you’re looking to review last week’s program which includes a look at robotic milking, click here.

  1. Randy Miller says:

    Mark and Elaine,

    I watched the show this morning on the Internet. Once again there seems to be speculation disrupting some commodities markets, in this case beans and cottons. I flashed back to the commodities bubble of early 2008, which a lot of people think was speculator driven; whereby speculators pulled their money out of financial markets, and pumped it into commodities. I watched the oil, corn, and bean market closely. The supply and demand for the commodities themselves could not justify the prices we were seeing, but the supply of speculator money could drive those prices up.

    My question for you two is: has there ever been a study on these commodities bubbles, a book written about them? I have seen dozens of books on the speculative bubble in financial instruments that almost destroyed Wall Street, but nothing on the commodities bubble. I would think some of the Ag Econ people at places like Iowa State would have something out there.

    I appreciate any feedback.

    Randy Miller
    Ida Grove Ia

  2. Elaine Kub says:

    Randy -

    The most frequently cited study is by two University of Illinois researchers, titled “The Impact of Index and Swap Funds on Commodity Markets.” It concluded that these speculators did NOT create a “bubble” in the specific case of the 2008 markets.

    More generally, I think when seasonal ag commodity prices form a spike, which they frequently have done throughout the history of supply shortages, they get that term “bubble” applied to them inappropriately. Prices may move up and down more sharply than asset classes better understood by the average speculative investor, but as long as the cash market (the underlying value of the tangible asset) moves in line with the futures, I don’t think we can accurately call it a bubble.

    We may, however, expect prices to drop dramatically (similar to a stock bubble or real estate bubble popping) when the next season’s supply becomes known. So even though it may look like a bubble and act like a bubble and smell like a bubble … it may not actually be a true “bubble,” in my opinion.

    Would love to talk more about this with anyone interested,
    Elaine Kub

    ekub@agrisk.net

    http://www.agriskconsulting.net

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