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The History of the Great Commodity Super Cycles

TAGS: Management


I was surprised by the record attendance recently at my annual “Agriculture and Beyond” speaking events sponsored by the Nebraska Bankers Association. These events in Norfolk and Lexington, Neb., had overflow crowds and some bankers, producers and agribusiness people had to stand out the hallways. Welcome to the great commodity super cycle that has brought wealth and prosperity to much of rural America!


A Decade and Counting

There have been four great commodity super cycles in the past century, each with a different duration, degree of magnitude and overall intensity. The first was during World War I, resulting in tremendous demand for agricultural products and metals, lasting for four years. During this time agriculture boomed with mechanization. Many of the old-time barns on our landscape today can be dated back to those times. The Farm Credit System, Cooperative Extension Service and the American Bankers Association’s agriculture division were created as a result of the super cycle. Unfortunately, while America’s general economy was booming during the roaring 1920s, agriculture crashed and stayed down until the beginning of World War II.

The second super cycle was 1950 to 1957, with the rebuilding of Europe and Japan, and investment in infrastructure and human capital in the U.S. The cycle lasted three years and it was the start of the great land appreciation boom. Many GIs who came back from World War II and Korea initially started in agriculture, and then moved into manufacturing in suburban and urban America.

The third super cycle during the 1970s was policy driven with the Russian wheat deal that changed the behavior of American farmers who started planting fence row to fence row. Oil replaced metals as the valued commodity. Land in agriculture and real estate in oil-based economies boomed and endured a 25-year appreciation run. Of course, the crash in the 1980s followed this super cycle, when land values declined 27% overall nationwide, but much larger amounts in the Midwest.

The current great super cycle is a triple whammy, impacting oil, metals and agriculture. It has now lasted for a decade, which is 2.5 times longer than any previous super cycle. Technology, innovation, large farms and agricultural audiences are the matters of the day. Land values have skyrocketed, particularly since 2007 and 2008, and while 260 million Americans in suburban and urban households have seen a decline of their income from $54,000 to $47,000, 60 million people in rural America have experienced profits and wealth accumulation.

How long will it last? As I told a group of young farmers under 40 years of age recently, they were 10 years old during the last crisis. If they are younger than 30, then they have only seen good times in agriculture during their lifetimes. All cycles end, and usually they are abrupt with consequences. Only time will tell!


Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

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