September Turmoil

Turmoil in the finance quarter plagues soft commodities and raises questions for fertilizers and biofuels.Corn, soybeans and oil prices are sinking rapidly amongst the mayhem following Lehman Brothers, Merrill lynch and AIG addition to the banking casualty list. The fall in price is not attributable to any USDA announcement of massive increases in supply but is a result of financial speculation leaving commodities. The impact of speculative players in the soft commodity prices now becomes evident as they bale out of Ag-Commodities and head for the shores of gold.

Only negative weather reports are helping to support some strength in ag-commodity prices. The next question must be –what of the fertilizer prices? –  Surely due for a realignment.

With the exodus of speculators from the ag-commodity market pressure on governments to readjust biofuel targets will fade – at least in the short term . The US import tariff on cheap ethanol will remain in place.

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