How does inflation affect commodities like corn and beans?

In general, the prices of commodities like corn and soybeans rise during inflationary periods.

The Relationship Between Commodity Prices and Inflation

Simon Moore, an investing expert who writes for Forbes, explains, “Whether energy, metals, agricultural goods or other commodities, most tend to rise during times of high inflation.”

Of course, he’s quick to point out that “this inflationary episode is not sustained” as inflation-related spikes in commodity prices are usually short lived.  

That being said, “the commodity-inflation relationship doesn't always hold” since there are many factors that affect markets. And, it’s also important to remember that “commodity price increases do not create inflation.”

The Takeaways for Farmers

Here’s a great farmer-focused article about the correlation between commodities and inflation. I like these two takeaways in particular.

Arlan Suderman of StoneX Group explained, “Farmers should keep in mind that this inflation cycle will not just raise prices for what they produce, but it will also dramatically impact the price of inputs necessary in that production … . Risk management plans need to focus on both the output and input sides of production.”

Brian Basting of Advance Trading put it this way, “What we can say by looking at commodity price history is that price change happens and can be very fast. Looking back on this time of history, we will be able to determine what happened. But markets do not afford producers that type of luxury. That’s why we strongly advise that producers utilize the various marketing tools available to defend their balance sheet.”