aarc

Firming Commodity Prices Would Indicate Economic Stabilization

One big problem with a price recovery or possibly over-appreciation of agricultural products due to supply shortages is that it is counter-productive.

Instead of helping economic recovery. It might as well become the primary factor in the near future towards economic destabilization and be able to stop any economic recovery effort on it's track or worsen the current recession further depending on how fast inventory supply runs out.

Firming Commodity Prices Would Indicate Economic Stabilization

Recovery in commodities could be slow.

Capacities are being shut down - not being destroyed. They can be re-deployed to meet future demands which is expected to be anemic at best.

Until full production capacity cannot meet rising demands, recovery is expected to be slow for commodities.

One exception could be agriculture. There is a growing shortage of food as draught in China and Australia are threatening the global supply capacity vs demand. This is the case where capacity cannot be easily ramped up if global weather conditions don't improve in the near future for agriculture.