Rising commodity prices are a good thing for ag, or are they? Certainly, higher beef prices are good, but one has to prefer the rise we saw from 1998-2004, which was largely independent of macro economic trends for commodity products in general. By regaining lost demand, we initiated one of the most extended periods of profitability for cow-calf producers.

The most recent trend in all commodities has been up. The two biggest from a beef industry standpoint are fuel/energy and corn, both of which are negatives.

It may be difficult to draw a direct link between gold price and beef prices, but if you hold to the school of thought that commodities, and gold in particular, are the best forecasters of inflation, then inflation is raising its mighty head. As a result, the Federal Reserve raised the interest rate to 5% this week. To find a higher federal funds rate, one must go back to 2001.

Sure, there are a lot of good signs in the economy - real GDP is up dramatically, new job creation outpaces that of Europe and Japan, real personal incomes are expanding impressively, new business creation is unprecedented, and equity values are expanding. In addition, after-tax corporate profits are off the charts, capital spending is up, and the balance sheet of the U.S. consumer has never been stronger, while foreign investment in the U.S. is increasing, as are the nation's assets.

Nevertheless, inflationary times are not usually good for the profitability of cow-calf producers. Nor does $3 corn, higher interest rates, $50,000 trucks, $20,000 trailers and $3/gal. diesel combine very well with declining consumer confidence and reduced disposable income. -- Troy Marshall