If you’re tired of hearing words such as “unprecedented” and “new normal,” you’re not alone. That said, over time, what is average or normal or expected does change and evolve.
Take commodity prices, for example. Over the very long term, the bottom level resistance for wheat futures at one time was $2/bushel. Eventually, that rose and stuck at $4/bushel.
Taking a 100,000-foot look at the commodity market now, one has to ask, is the past year the beginning of a new era of crop (and input) prices?
Chuck Penner, founder of Leftfield Commodity Research, based at Winnipeg, Man., is one person who is also a little tired of jumping to the “new normal” moniker quickly. But the longer elevated prices remain in play, and the longer global supply and demand prices stay in a holding pattern of volatility, the more this new range becomes “the norm.”
The likelihood of a new era emerging is supported by continued supply stress and increased retail prices. Add in a demand curve that doesn’t seem to want to even flatten, and Penner says there is some solid evidence that these higher commodity prices are settling in.
For what that might mean for crop movement, crop margins, and global demand, listen (or download for later) to this audio interview from the Nov. 9 edition of Realag Radio: