Agriculture is no longer a local endeavor. The Pennsylvania agriculture industry needs to think globally when making decisions or policy changes. Agriculture commodity prices are cyclical. Prices could climb then drop significantly the rise again. Our markets are affected by what is going on in the nation and world. Unexpected events that are very difficult to predict can cause significant price decreases. The recent earthquake in Japan, which caused the tsunami disaster, can really impact our agriculture here in Pennsylvania and the United States. This disaster was the largest earthquake on record in Japan. Japanese farmland and agriculture enterprises were flooded when the tsunami engulfed the towns.
According to a Wall Street Journal article, corn and lean hog futures saw sharp declines today. Japan is the largest United States pork buyer internationally as well as a major importer of American crops. Typically Japan has spent close to 1.65 billion dollars in 2010 on pork, which is 34 percent of the US export market. The United States is the top exporter of corn. Wheat, soybeans, and rice futures declined as well today. In a Business Week article, Carl Weinberg, chief economist at Valhalla said, “There is no way to assess even the direct damage to Japan’s economy, or to the global economy. Experience tells us that the economic shock can be, and likely will be, much bigger than anyone can imagine.”
Although it might be too early to evaluate the overall impact of the Japan earthquake and tsunami, we do know that the markets will be affected at some level. This further proves that commodity prices are volatile and are impacted by events that transpire worldwide.
