Ag Options, U.S. Farmland Prices Set to See More Volatility Soon?

Ag Options, U.S. Farmland Prices Set to See More Volatility Soon?

By Erik Norland, Senior Economist, CME Group

Ag Options: Caught in the Fed’s Monetary Policy Vortex

  • Ag options on futures trading near record lows after years of easy monetary policy
  • So are options on Treasuries, equity indices, currencies and precious metals
  • Which has a greater impact on Ag options: monetary policy or weather?
  • Will monetary tightening escalate volatility in Ag options, other asset classes?
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Three Factors That Could Undercut U.S. Farm Values

  • Value of U.S. farmland has been drifting sideways since 2015
  • How could rates, dollar strength and crop prices influence farmland prices?
  • When interest rates are below inflation levels, farm prices tend to rise
  • With real rates expected to turn positive by 2020, are farm values at risk?
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