The immediate future in terms of grain prices must be one which is keeping forecasters sleepless at night right now.
When we look at the current situation potash, where prices are softer than expected right now, it would seem to indicate commodity prices are about to decline in general. Generally one commodity, in this case potash, doesn't see price fluctuations in isolation of commodities.
The cloud hanging over the overall economic situation in Europe, particularly Greece, Italy, and several other countries certainly lend credence to concerns commodity prices are about to take a lower position.
The American situation is no better, as much as politicians there might be posturing it otherwise as they fight for the upcoming presidential election.
Once the election is over whoever is the president is going to face an economy which is in shambles with no easy path to bettering the situation. With a shaky situation in the U.S. the world economy could teeter into recession rather easily.
Yet against the backdrop of uncertainty grains and oilseeds seems to be running counter to those trends.
Grain prices remain strong.
There are a couple of reasons for this which seems quite apparent.
For many years there has been an underlying belief grain prices would eventually strengthen and remain higher than historically expected based on the growing world population, and importance of food.
While many of the world's poor still struggle to afford enough food, many facing starvation and malnutrition daily, it does appear grains and oilseeds have greater value today.
There is probably an element of grains and oilseeds being diverted to energy production playing a role as well since oil and gas are not being dragged down in the face of a world completely reliant on its energy sources.
Weather conditions are also playing a role.
We see that in terms of what a drought across much if the U.S. is doing to corn and soybean prices.
The Aug. 10 United States Department of Agriculture crop report cut 30 bushels per acre from this year’s estimated corn crop, and corn futures prices have set new record highs above $8.50 per bushel.
Of course the American situation is an interesting one as drought conditions are a 2012 price element, but the bigger question of course is that of politics.
The price influencing Farm Bill in the U.S. ends this September, and what replaces it against the backdrop of a country with financial red flags being waved all over Washington, are going to be as important to American farmers as the arrival of rain clouds moving forward.
The Farm Bill will also have its effect on world prices.
So while grain prices are doing well today, the longer term direction of prices is pretty much a roll of the dice with so many opposing pressures influencing them.