Rising Political Event Risk, Falling Ag Currencies Could Move Markets

Rising Political Event Risk, Falling Ag Currencies Could Move Markets

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Political Event Risk Raises Stakes for Sudden Price Moves

Highlights

  • Rising political event risk could gyrate equity, FX, bond and ag markets
  • Elections in U.S., Mexico, Brazil; NAFTA, Brexit talks among the triggers
  • Trade wars could affect companies, products more than economic activity
  • June OPEC summit, Middle East geopolitical tension hold sway over oil prices
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Should U.S. Farmers Fret About Falling Ag Currencies?

Highlights

  • Weaker currencies in Brazil, Argentina unlikely to impact crop prices in short term
  • Long term, weaker currencies could reduce cost of production, benefit exporters
  • Weaker currencies could lower ‘floor’ prices of corn, soy, wheat in bearish market
  • Options are pricing a greater upside than downside risk to crop prices
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