Fighting Yoda

13 Agriculture Myths Busted: This Bubble Is Ready to Pop

Agree with the views of the author – Ag had a major bull run – went into a bubble despite a significant pullback all Ags are still overpriced. The Ag and commodity bulls have raised the argument that – demand will continue to increase and supply is constrained – that is simply not true. Firstly supply is not at all constrained – more and more land can be brought under cultivation world over and technology increases productivity – you do not even require that much land.

Ag prices have fallen significantly in the recent past – are people going hungry – there is no evidence to that effect, and recession should not have any meaningful impact to basic food consumption. But based on price and demand data – we can conclude there was a big speculative bubble that has subsided now.

I expect Ag prices to trend even lower with decrease of speculation, same should be the case for Ag suppliers like POT, MON, DE etc.