Farmers have to make a profit to stay in business. Government subsidization of past generations is gone. The current safety net is basically laying on the ground. Farmers who feel a pinch from low commodity prices now will likely feel more in the year ahead.
However, the Federal Reserve raised interest rates and may continue to raise rates in 2018, if the economy heats up. It is not all good news nor is it all bad news.
It was no surprise last week when the Federal Reserve upped its federal funds rate target range by 0.25%. With their positive outlook for the United States economy, the Feds plan to continue to raise interest rates well into 2018.
The most recent hike was one of the bright spots for farm commodities this week, according to Mike Zuzolo from Global Commodity Analytics. Zuzolo says if these trends continue in gold, crude and the dollar, then that would signal to him that the market assumes that aggregate demand is going up, global trade will go up and inflation will take a stronger hold in the markets.
