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GrainEpisode 167

Managing risk during volatile times

Matthew Wilde
May 22, 2024

It’s hard to imagine a more volatile time in agriculture than the past few years, says Ken Zuckerberg, director of global research with CHS. He discusses the major trends driving ag price uncertainty and provides strategies for managing risk.

“There is more volatility now in ag and energy commodities during the post-COVID period than we saw five years prior to that,” Zuckerberg says. “However, markets have discounted or got used to the recent political and geopolitical shocks, namely the Russia-Ukraine war, the Middle East conflicts and tensions related to China.”

Volatility drivers

Zuckerberg highlights five trends spurring volatility and affecting farmers, ranchers and cooperatives.

  • Higher inflation and interest rates: “These will likely stay higher for longer, if not indefinitely. But the good news is when you look at long-term averages, the current level of interest rates is more normalized and manageable than most people recognize. We’ve been here before, and we can manage through it.”
  • Geopolitical instability: “Arguably, this is one of the most pressing concerns facing the future of global ag trade. While the U.S. still holds considerable economic and military power and the U.S. dollar is still the world’s main transactional currency, America’s influence on global security and democratic thinking is under threat.”
  • Domestic politics: “The important aspect for farmers, ranchers and rural communities is the timing and eventual passage of the new farm bill. The potential for new trade tariffs and changes to biofuel policies, climate initiatives and carbon sequestration programs is possible.”
  • China: “China is undergoing a series of economic and structural changes that will impact long-term demand for agricultural products. The key issues are slower economic growth and an aging population.”
  • Weather volatility: “We’ve seen increased frequency and severity of weather events. There have been volatile temperatures, drought and flooding that impact ag production.”

Zuckerberg says volatility, a function of expectations and unexpected occurrences, will continue for the near future, but could stabilize in some areas.

“The Middle East conflicts during the past six months have had less of an impact on energy prices than most people, including me, expected. The world is getting used to more shocks,” he continues. “The fact that we have a lot of participants in the grain and fertilizer markets helps temper extreme commodity price volatility.”

Risk management strategies

During volatile times, Zuckerberg offers the following risk management tips.

  • Have the right mindset and understanding the “new normal” may be higher interest rates and inflation.
  • Understand agriculture is cyclical business.
  • The rate of change of technology, innovation is faster than ever before. Evaluate tools that can add value to an operation.
  • Employ strategic planning and utilize trusted advisers to help improve farm management.
  • Prioritize generating profits and maximizing returns on capital investments, not necessarily improving yields.


Any information or opinions presented is for general informational purposes only and does not constitute trading, legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. CHS makes no warranties, representations or undertakings, whether express or implied, about any information or opinions and shall not be liable for the use of any information or opinions, or any inaccuracies or errors therein or omissions therefrom.

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