On Tuesday we saw a run up in commodity prices, especially in soybeans. This time of year news out of South America often drives bean prices, and Jim Bower of Bower trading says heavy rains, and flooding, in soybean growing areas did help drive the markets higher.
But flooding in South America is only part of the story… Bower says 2017 may bring increased volatility and perhaps increased prices as the stock market seems to have topped out, interest rates remain low, and economic growth lingers at around 2%. Recognizing that demand remains strong and we can’t assume a repeat of excellent growing conditions in 2017, commodities have the potential for price gains this year, and that’s starting to attract a lot of investment money.
While we could have another bumper crop that puts a lid on prices, the big investment funds are starting see more upside potential than downside risk and an inflow of funds can push prices higher.