Inflation could add instability in the ag economy in 2022


Inflation could add instability in the ag economy in 2022

A market analyst says inflation could create added volatility in commodity markets in 2022.

Bill Biedermann with AgMarket.Net tells Brownfield the food and ag sectors are usually impacted last if inflation causes producers to spend less money. “If your disposable income got so tight that you start quit buying things, and then everything started to fall eventually grain markets start to fall too,” he says. “If we’re caught on the greed side of that equation waiting for that higher price – just one more day of it – and we’re not protected, it could really hurt.”

He says tensions with Russia and Ukraine might cause the federal government to intervene. “That could be good for our markets. If the fed doesn’t come in and start doing something to manage and (then) this going to have to happen on a world basis then the free market will take care of the inflation problem and we don’t want that.”

Another example, he says if the Federal Reserve doesn’t curb the rate of inflation, land values will be impacted.

“Land values have gone up from $5,000 to $12,000 in the last year to 24 months. Something like that could drop in value and that would affect balance sheets dramatically.”

He says the central banks around the world need to work together to help soften the blow for producers.

Brownfield interviewed Biedermann at the AgMarket.Net meeting.