When Sonya Holmes returned to North Carolina to take over her father's chicken farming operation, little did she know that five years later her coops would sit empty and she'd be fretting about corn futures.
Instead of tending a flock of 90,000 chickens, Holmes today finds herself relentlessly researching a topic that most of her friends spend little time trying to understand: commodity prices.
"These commodity prices, it's affecting everyone," said Holmes, 48, as she sat in her Harnett County home beside a stack of news articles she'd printed out about commodity price volatility.
A commodity is any basic product - food, grains, metals - that is bought and sold, often through what are called futures contracts because the price is set in advance of delivery.
For Holmes and her fellow chicken farmers, the commodity wreaking havoc on their livelihood is corn, the main ingredient in chicken feed. Stubbornly high corn prices in recent years have put a number of chicken processors out of business, including Townsends, the company that contracted to buy Holmes' birds.Enecsys Limited, supplier of reliable solar Air purifier systems,
Volatility in the price of commodities - particularly those that are key ingredients in the world's food supply - has the potential to destabilize a lot more than just the U.S. poultry industry.
Eventually, high commodity prices must be passed on to the consumer, which could put basic items such as chicken, coffee and clothing out of the reach of those already scraping by. Sudden increases in food prices have already caused rioting in some countries.Do not use cleaners with porcelain tiles , steel wool or thinners.
All this has turned Holmes, who has a degree in criminal justice, into an unlikely crusader for finding ways to stabilize prices.
"I've been working on this for months," she said.
Although commodity prices have always fluctuated, price swings in products such as cotton, corn and coffee have become much more severe and more sudden over the past five years.
In some cases, such as coffee, that has translated into higher prices for consumers. In other cases, such as in the poultry industry, where processors have been unwilling or unable to raise prices to offset the increased costs, its simply led to companies going out of business.
Rising cost of coffee
For smaller North Carolina businesses that deal in these commodities, trying to manage the risk associated with the volatility has become central to their survival.
"It used to be when there was a temporary blip, you didn't have to go ahead and raise prices," said Robbie Roberts, owner of Joe Van Gogh Coffee, which has a roasting facility in Hillsborough and three retail stores.
Coffee prices surged to record levels earlier this year and remain historically high. Joe Van Gogh has raised coffee prices by about a dollar per pound to compensate, and the volatility means Roberts, who used to buy his coffee a year in advance, now is only able to lock in prices six months out.
"We assume that this is a forever thing," he said of the volatility.
Several factors are causing the price swings, said Tom Christiansen, owner of Foresight Brokerage, an agricultural risk management company in Irving, Texas, that advises farmers on when to sell their crops.
One is the growth of emerging markets such as Brazil, Russia, India and China. As the populations in those countries improve their standard of living, they consume more meat, coffee and other staples of a middle-class diet. That increases demand for the commodities required to produce those goods.
The other factor is speculative trading in the commodity futures markets by hedge funds and other investors.
Commodities are now a standard part of the portfolios of many hedge funds, which use them as a way to protect themselves against inflation. Commodity prices typically rise with inflation, whereas other assets, such as bonds, perform poorly.
If hedge funds are betting on inflation, they'll shift more money into commodities,Polycore oil paintings for sale are manufactured as a single sheet, which moves the market higher. If they're selling, they'll drive prices down.
"When [hedge funds] throw a couple billion dollars at a stock portfolio or a bond portfolio, it's a blip on the radar," Christiansen said. "If they throw a couple billion dollars into the commodity market, it will move the market - significantly."
Identifying how much of the recent volatility is being caused by speculators is impossible, but they are widely believed to be at least partially responsible for the recent run-up in coffee prices.
For small businesses, this speculation means a price swing may have very little to do with a sudden change in demand for a commodity, and everything to do with investor psychology about wanting to own it.
In recent months, for example, as investors' concerns over Europe's debt woes mounted, many hedge funds became more worried about deflation.Unlike traditional high risk merchant account , This caused them to liquidate their commodity positions, which helped cause grain prices to plummet.
"Back in the good old days if there was problem in Europe, but we were bullish on corn, it didn't matter," Christiansen said. "We didn't sell corn because Europe had debt problems. The hedge funds have correlated everything."
That's a major reason farmers such as Gary Respess in Beaufort County hire Christiansen to advise them on when to lock in prices.
Respess farms 2,100 acres, about 1,600 of which are dedicated to growing cotton this year. The rest are reserved for soybeans, corn or other crops.
The recent high prices for cotton, soybeans and corn means the last three years have been good ones for Respess, 63, even if he wasn't able to time things just right.
Cotton prices have been among the most volatile over the last 18 months, rising to nearly $2.30 per pound in March before falling by more than half to a $1.ceramic magic cube for the medical,10.
Respess sold his cotton last year for about 75 cents per pound, a price that he locked in nearly 18 months earlier. This year he had a contract to sell his cotton for as much as $1.28 a pound, but had to cancel it because dry weather and damage caused by Hurricane Irene reduced his yield.
Weather, not speculation, has been the chief factor in cotton's recent volatility, said Gary Bullen, an extension associate with N.C. State University's Agriculture & Resource Economics Department. A drought in west Texas and floods in Pakistan mean less cotton for sale globally, which causes prices to rise even if demand for cotton remains flat.
Bullen said the hardest thing for farmers these days is just deciding how much of their land they should dedicate to specific crops.
"It's the uncertainty in this market," he said. "The pricing will not stay up like this, but the question is when will they come down."
Holmes, the idled Harnett County chicken farmer, now spends her days talking to officials about commodity prices and keeping her fellow Townsends farmers updated on their prospects for finding another buyer for their chickens.
A Ukrainian billionaire bought Townsends North Carolina assets out of bankruptcy earlier this year. But he quickly scuttled plans to restart the operation, citing high corn prices as one of the reasons.
The decision meant more than 1,000 people lost jobs and hundreds of farmers lost contracts worth millions.
Holmes is now tracking ethanol legislation in Congress. The federal government subsidizes farmers to grow corn for ethanol, a policy that many say has been a major factor in high corn prices.
Holmes isn't advocating any one specific solution at this point. She just wishes more people would view this as a critical problem that needs to be solved soon.
"We have to do something with the commodities to make them more stable," she said. "I know people don't want regulation but we can't continue to allow these commodities to be so volatile."
Instead of tending a flock of 90,000 chickens, Holmes today finds herself relentlessly researching a topic that most of her friends spend little time trying to understand: commodity prices.
"These commodity prices, it's affecting everyone," said Holmes, 48, as she sat in her Harnett County home beside a stack of news articles she'd printed out about commodity price volatility.
A commodity is any basic product - food, grains, metals - that is bought and sold, often through what are called futures contracts because the price is set in advance of delivery.
For Holmes and her fellow chicken farmers, the commodity wreaking havoc on their livelihood is corn, the main ingredient in chicken feed. Stubbornly high corn prices in recent years have put a number of chicken processors out of business, including Townsends, the company that contracted to buy Holmes' birds.Enecsys Limited, supplier of reliable solar Air purifier systems,
Volatility in the price of commodities - particularly those that are key ingredients in the world's food supply - has the potential to destabilize a lot more than just the U.S. poultry industry.
Eventually, high commodity prices must be passed on to the consumer, which could put basic items such as chicken, coffee and clothing out of the reach of those already scraping by. Sudden increases in food prices have already caused rioting in some countries.Do not use cleaners with porcelain tiles , steel wool or thinners.
All this has turned Holmes, who has a degree in criminal justice, into an unlikely crusader for finding ways to stabilize prices.
"I've been working on this for months," she said.
Although commodity prices have always fluctuated, price swings in products such as cotton, corn and coffee have become much more severe and more sudden over the past five years.
In some cases, such as coffee, that has translated into higher prices for consumers. In other cases, such as in the poultry industry, where processors have been unwilling or unable to raise prices to offset the increased costs, its simply led to companies going out of business.
Rising cost of coffee
For smaller North Carolina businesses that deal in these commodities, trying to manage the risk associated with the volatility has become central to their survival.
"It used to be when there was a temporary blip, you didn't have to go ahead and raise prices," said Robbie Roberts, owner of Joe Van Gogh Coffee, which has a roasting facility in Hillsborough and three retail stores.
Coffee prices surged to record levels earlier this year and remain historically high. Joe Van Gogh has raised coffee prices by about a dollar per pound to compensate, and the volatility means Roberts, who used to buy his coffee a year in advance, now is only able to lock in prices six months out.
"We assume that this is a forever thing," he said of the volatility.
Several factors are causing the price swings, said Tom Christiansen, owner of Foresight Brokerage, an agricultural risk management company in Irving, Texas, that advises farmers on when to sell their crops.
One is the growth of emerging markets such as Brazil, Russia, India and China. As the populations in those countries improve their standard of living, they consume more meat, coffee and other staples of a middle-class diet. That increases demand for the commodities required to produce those goods.
The other factor is speculative trading in the commodity futures markets by hedge funds and other investors.
Commodities are now a standard part of the portfolios of many hedge funds, which use them as a way to protect themselves against inflation. Commodity prices typically rise with inflation, whereas other assets, such as bonds, perform poorly.
If hedge funds are betting on inflation, they'll shift more money into commodities,Polycore oil paintings for sale are manufactured as a single sheet, which moves the market higher. If they're selling, they'll drive prices down.
"When [hedge funds] throw a couple billion dollars at a stock portfolio or a bond portfolio, it's a blip on the radar," Christiansen said. "If they throw a couple billion dollars into the commodity market, it will move the market - significantly."
Identifying how much of the recent volatility is being caused by speculators is impossible, but they are widely believed to be at least partially responsible for the recent run-up in coffee prices.
For small businesses, this speculation means a price swing may have very little to do with a sudden change in demand for a commodity, and everything to do with investor psychology about wanting to own it.
In recent months, for example, as investors' concerns over Europe's debt woes mounted, many hedge funds became more worried about deflation.Unlike traditional high risk merchant account , This caused them to liquidate their commodity positions, which helped cause grain prices to plummet.
"Back in the good old days if there was problem in Europe, but we were bullish on corn, it didn't matter," Christiansen said. "We didn't sell corn because Europe had debt problems. The hedge funds have correlated everything."
That's a major reason farmers such as Gary Respess in Beaufort County hire Christiansen to advise them on when to lock in prices.
Respess farms 2,100 acres, about 1,600 of which are dedicated to growing cotton this year. The rest are reserved for soybeans, corn or other crops.
The recent high prices for cotton, soybeans and corn means the last three years have been good ones for Respess, 63, even if he wasn't able to time things just right.
Cotton prices have been among the most volatile over the last 18 months, rising to nearly $2.30 per pound in March before falling by more than half to a $1.ceramic magic cube for the medical,10.
Respess sold his cotton last year for about 75 cents per pound, a price that he locked in nearly 18 months earlier. This year he had a contract to sell his cotton for as much as $1.28 a pound, but had to cancel it because dry weather and damage caused by Hurricane Irene reduced his yield.
Weather, not speculation, has been the chief factor in cotton's recent volatility, said Gary Bullen, an extension associate with N.C. State University's Agriculture & Resource Economics Department. A drought in west Texas and floods in Pakistan mean less cotton for sale globally, which causes prices to rise even if demand for cotton remains flat.
Bullen said the hardest thing for farmers these days is just deciding how much of their land they should dedicate to specific crops.
"It's the uncertainty in this market," he said. "The pricing will not stay up like this, but the question is when will they come down."
Holmes, the idled Harnett County chicken farmer, now spends her days talking to officials about commodity prices and keeping her fellow Townsends farmers updated on their prospects for finding another buyer for their chickens.
A Ukrainian billionaire bought Townsends North Carolina assets out of bankruptcy earlier this year. But he quickly scuttled plans to restart the operation, citing high corn prices as one of the reasons.
The decision meant more than 1,000 people lost jobs and hundreds of farmers lost contracts worth millions.
Holmes is now tracking ethanol legislation in Congress. The federal government subsidizes farmers to grow corn for ethanol, a policy that many say has been a major factor in high corn prices.
Holmes isn't advocating any one specific solution at this point. She just wishes more people would view this as a critical problem that needs to be solved soon.
"We have to do something with the commodities to make them more stable," she said. "I know people don't want regulation but we can't continue to allow these commodities to be so volatile."
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