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With a worldwide economic slowdown and concerns of a hard landing in China, high-flying commodities have come back down to Earth. The apparent realization that trends don't last forever or occur uninterrupted has these investment vehicles taking a backseat lately. An obvious commodity that will be affected is copper, a purely industrial metal driven by construction demand. Oil is in its own world, driven by a simple formula of greater consumption despite economic weakness and occasional but persistent Middle East tensions. What about the effect on agricultural commodities? They have been under pressure, too.
From a long-term perspective, the agriculture commodities are simply in a consolidation or normal corrective pullback. Like stocks, expectations get priced in and sometimes those expectations lead to running prices too quickly, requiring some adjustment. The worldwide economic slowdown is one obvious reason to expect less demand for just about everything, including agricultural commodities. The underlying long-term trend, however, remains intact and is likely to continue....530 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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