2017 – A Year of Turbulence “But The Good Times Are Coming” – Week 14

Commodities

The fact that most commodities traded in this world are priced in Dollars is a strategic advantage for the United States of America. It also means that as the Dollar strengthens, commodity prices around the world are lowered. This puts a severe burden on those countries that export commodities to us and also makes USA exports more costly.

We expect the Dollar to continue to strengthen in 2017 due to The Fed raising interest rates when most other central banks in the world are still playing games with QE, (Quantitative Easing).

A stronger Dollar means fewer foreign buyers of our agricultural commodities. Because their income will be reduced and their expenses will remain stable or increase, the net result of that shift puts more pressure on farmers and all the ag related businesses that supply them. It also has an impact on the value of crop land.

Here in Virginia we did not see over the last six years the dramatic run up in crop land price increases experienced in the Midwest. Therefore, we do not expect to see a decrease in cropland prices in Virginia.