The cure for low prices is…low prices?

I’ve been following/trading the grains markets with interest these days.  A couple reasons:

  1. For some months, they actually had some volatility to sell, as opposed to equities, FX, and bonds.
  2. The best-of-all-time harvest theme runs through the press.  See this Bloomberg article, for example.

One of my dad’s old favourite sayings is ‘the cure for high prices is high prices’, at least when it comes to farming.  Farmers these days see the pricing, and plant accordingly.  So all these guys who planted corn last season, with prices up around $5, are now seeing record harvests and prices back down around $3.50.  Volatility, indeed.

Goes to show the path of technology, anyway.  Fewer and fewer farmers, producing bigger and bigger crops.  These lower food prices ought to help inflation, too.  

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