19 October 2014 - Yes, This is a Global Market

Since I have been actively covering markets, both on Wall Street and in the commodity world, for over a half-century, I am very often asked what is the biggest change I have seen in the market world in that time. I have a one-word answer - globalization.

There was a time when we paid little attention to what was going on outside our borders in the world of agriculture or in the world of the stock market. But my, how that has changed, and did we ever get another example of that this past week, as we watched the roller coaster performance on Wall Street. It reminded me of the up-limit, down-limit days in the grain market. We watched the market drop like a rock one day, only to rebound the next day and then drop again the next day; it was not a time for those traders who are faint of heart.

But let’s look at the factors that influenced the market...

It started with negative economic news in the Euro Zone, particularly Germany, the Zone’s largest economy.
The Ebola story that gets bigger everyday and is more than a health crisis in Africa, it is impacting the world, as well as the financial future of the travel and leisure industries.

The democracy demonstrations in Hong Kong upsetting Asian markets and eventually Wall Street and the world.

And still the ongoing crises in Ukraine/ Russia, the Gaza Strip and with ISIS in the Middle East.
They all have one thing in common, they originate outside our borders, but have a tremendous influence on our economy. What did I say about being global?

And then there’s agriculture. When I started covering agriculture on TV and radio in the Midwest back in 1956, I focused on grain prices at the Board of Trade, cash hog and cattle prices at the terminal markets in Chicago, Omaha, Denver and St. Louis (the Mercantile Exchange was just a butter and egg market), and weather forecasts only for the Midwest. Farm news occasionally originated in Washington, but there was little or no agricultural news from other parts of the world.

Today we cover foot-and mouth disease in the U.K., Mad Cow Disease in Canada, Avian Bird Flu and Swine Flu in Asia, and I spend more time in the winter talking about weather in Australia and South America than in the Midwest. All of those events (outside our borders) have a major impact on your prices and marketing plans.

So, it becomes more important than ever for us to pay more attention to what is happening outside the U.S. when we establish marketing plans for our commodities or for that matter, Wall Street. Gone are the days when my Dad and I were no longer concerned about that can of milk once it left our dairy farm. We no longer live and work in an agriculture that is county, state or American. Like it or not, we truly are a global agriculture. So embrace it, and make it work for you.

My thoughts on Samuelson Sez.