March 28, 2024

Expect volatility in ag economy

Economist shares outlook

WABASH, Ind. — Volatility in the agricultural economy is expected to continue into 2023, according to Brent Gloy, economist at Agriculture Economic Insights.

Gloy was a featured speaker during a webinar hosted by Halderman Real Estate.

“The situation we’re facing today is volatile,” he said. “To me, it doesn’t look like that’s going to end anytime soon. I think we should expect to see a lot of volatility going forward.”

The volatility isn’t all bad. Positive volatility includes high farmland values and overall good economic conditions in the farm sector.

However, it’s a risky time as farmers plant the most expensive crop of their lives in 2023.

“The cost of production is very high,” Gloy said.

“That creates risk. I’m not saying it’s bad. But keep in mind there’s a lot of risk. If something goes wrong, there’s a lot of downside due to high costs.”

Unstable weather also plays a role in the market’s volatility.

“Part of the reason things are good is because there is a general tightness in commodity stocks,” Gloy said. “It’s not just corn, soybeans or wheat — but all of the commodities grown across the world.

“It’s largely due, in my opinion, to some pretty uncooperative weather the past several years around the world.”

Another reason to expect volatility is unstable macro-economic conditions.

“We have inflation that we have not seen for 40 years in the U.S,” Gloy said. “As those things change, it’s hard to know exactly how it will play out.”

High inflation, combined with geopolitical uncertainty around the world — and not just in Ukraine, Gloy said — creates more risk.

“The U.S. geopolitical relationship with China is not good,” he said. “It’s troubled. If we were in a marriage, we’d be in counseling. We both need each other. But we both are not happy with each other. That creates a backdrop of uncertainty that could create volatility.

“As farmers or farmland owners, you want to prepare, plan and stay informed so that you can lock in or take advantage of the current economic conditions.”

Erica Quinlan

Erica Quinlan

Field Editor