Could gold lead corn and soybean prices higher? If the gold price stays high, it may lead to higher commodity prices suggests Chris Hurt, Purdue University agricultural economist.
“Gold is high because of inflationary expectations, and we can expect corn, soybeans and wheat to also have an inflationary spiral if these hold,” Hurt says.
The struggling economy, the possibility of higher interest rates and all the other financial problems facing taxpayers have come home to roost, the economist noted.
“It’s the uncertainty and fear that all these problems are not dealt with yet,” he explained. “The federal government has put out $3 trillion — maybe that will work out, but the odds are small.”
Hurt also points to tighter corn inventories this year. “There’s no surplus of corn — it’s your leading crop for next year,” he noted. “It will be the go-to crop, reflected by these inventories.”
Some areas witnessed record soybean yields this year such as central Indiana where farmers recorded 51 bushels per acre. “The USDA’s report at $9.20 is too low — prices will likely be around $9.70 when all is said and done,” Hurt said. “We have adequate stocks, but the world inventory is a worry. There’s reason to think South America could come in with a good-sized crop.”
Hot, dry and drafty weather in the southern hemisphere could shave off crop yields, however, leading to the possibility of beans anywhere between $10 and $20 per bushel.
“The bean chart right now is indicating prices will flatten out through March and come down in price in the spring, so there’s not a strong storage signal being sent from the market there,” the economist said.