Growth of non-traditional participants in ag commodities poses risks

Implications: The ag commodity markets are trading on emotion, and to some extent, fear, without and regard for supply and demand, and the continued economic viability of that demand.  The old market saying is that high prices are the best cure for high prices, but the "cure" may be a bitter pill to swallow.

Analysis: This article brings light to the increasing concern that the ag commodities markets are not only highly over-priced, but also that these current prices are being driven by non-traditional participants, and if and when the market turns, the reversal is likely to be fast, and the drop significant. 

Expanded limits on wheat prices now allow daily price changes of over one dollar per bushel, so when funds decide to exit the market, watch out below.

I know some new players to this sector believe we have entered a new period of ag prices, and I would concur.  Where I differ is on what this new level is.  Is $5.00 corn the new standard? 

Even ethanol can't keep corn at these prices forever, with margins now of less than $0.30 per gallon in some cases, and that's with crude oil at record levels.

Livestock feeders certainly wont be able to withstand these feed prices forever, at least until they reduce numbers, forcing meat prices, and profitability back up. 

The ag commodity markets are trading on emotion, and to some extent, fear, without and regard for supply and demand, and the continued economic viability of that demand.  The old market saying is that high prices are the best cure for high prices, but the "cure" may be a bitter pill to swallow.