A number of factors are sending up red flags about slowing economic activity and a potential oncoming recession.  A CoBank report said inflation is the largest red flag, and the Fed is ready to raise rates until it believes inflation has been controlled.

“Warehouse and inventory costs are still rising at near-peak levels, and transportation costs are rising at a much higher rate than before COVID-19,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange. “Grain rail car availability and prices were at multi-year lows and highs respectively, in the second quarter.”

Shifting economic sentiments have brought ag and energy commodity prices down from their peaks.  Grain prices in the second quarter remained volatile, but grain and oilseed prices should push higher because of tight global commodity supplies, especially wheat and soybeans.  There are challenges ahead because of dry July weather, and Asian-made crop protection chemicals will continue in short supply.

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