Interest Rate Hike a Double-Edge Sword for Agriculture

Dan Economy, Industry News Release

interestIt was no surprise earlier this week when the Federal Reserve upped its federal funds rate target range by 0.25%. With their positive outlook for the U.S. economy, the Feds plan on continuing to raise interest rates well into 2018. This most recent hike was one of the bright spots for farm commodities this week, according to Mike Zuzolo from Global Commodity Analytics

Bright Spot

Zuzolo says if he sees 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.

Higher interest rates, on the other hand, will impact the cost of doing business on the farm. Even though rates are still manageable for producers, Zuzolo says it may be time to take control of some operating costs.


Zuzolo says that farmers may be better suited leaving 10, 15 and 30 year loans open at this point.

From the National Association of Farm Broadcasting News Service.