(Agriculture.com) – While there continues to be a lot of chatter and rhetoric surrounding the possibility of Greece leaving the European Union, the impacts are very debatable.
For one thing, no matter where you reside around the world, economically speaking things are not that great. While the talking heads want to say that the U.S. economy is steaming ahead, I would argue that if you compare ourselves to ourselves, we don’t look so hot.
A tepid U.S. economy, a weak European Union, and a faltering China have investors on their heels. Introduce a Greek default, and it’s just about enough to push the U.S. investor to the sidelines.
At the time of writing, the U.S. stock markets (Dow and S&P) are virtually unchanged for the year. Bonds are hovering around 2.25% 10-year yield. Not exactly stellar performances.
So why is Greece a big deal? It’s the dollar.
A faltering European economy will weaken the Euro and by default and a flight to safety, strengthen the dollar. A stronger dollar will begin to hurt our exports, especially if our currency is appreciating in value at the same time foreign economies are getting worse. It is like a one-two punch to the gut. Our customers have weaker economies and less money. Ouch.
Take that information and combine it with a bigger crop, and the gray clouds look to be getting darker. Price action as of late has been fairly volatile in the grain room, and the international wrangling will only add to that this summer.
