Mid Week Comments

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Economy Rebounds - 05/26/20

The US and world economies are rebounding nicely now that the private
sector is once again allowed to operate in the best way possible - not
just for themselves but for the customers they serve. As much as some
politicians would like to continue to control virtually everything,
fortunately that's not legal in a non-communist country. Of course there
are a few elected officials that still think their ideas from the ivory
tower of state capitals should still rule, obviously now that makes
little sense to almost anyone. Because when private business operates
with decisions made locally (think not just state, but city, county,
township, etc), things are getting a whole lot better in both fighting
the virus AND economic activity.

By almost all measures, the actions of opening the economy after an
initial bout against the virus is working. Virus infections are less
than half/day what they were in April (and dropping), but also deaths
from the virus is dropping dramatically as well. Flight passengers,
restaurant meals served, retail sales, and economic activity of almost
every kind is going back up. So it appears that the US and world
economies will be much better than expected just a month ago. That is
improving the outlook for the stock market, which has gained back about
60% of the losses and trading at 25,000 DOW (vs. 29,500 high and 18,000
low). Grains and livestock, which are still trading at or near the lows,
may soon follow.

Weather shows an interesting pattern recently of well below normal precip
in the western corn belt, and well above normal precip in the eastern
corn belt (especially MI, ILL, IND, OH, KY, and TN). The past 30 days
have seen some excessive rains in the eastern belt (up to 10" of rain),
and the past 7 days have shown mostly 1-3+" of rain in the states listed
above. This is turning into a threatened drought in parts of the western
corn belt, and the need for rainfall in the rapid planting western corn
belt states could become a concern. Also, the dry weather in ND may not
have been in time to avoid significant prevent planting as temps simply
were ice-cold for all of March and most of April; with the saturated
soils to start the year, they never had a chance to dry out. Now with no
time left on northern corn planting (final planting date yesterday),
there was just no time to get hardly any corn planted. However, with
improving drying it might be possible to get half to 2/3 of intended
wheat and soybeans planted.

Forecasts show above normal precip the next 7 days in the eastern 2/3 of
the corn belt, but below normal in the western 1/3 with temps below
normal in much of the corn belt, and above normal in the western US. The
rain switch seems to want to turn off in the 8-14 day pattern, with below
normal precip and above normal temps in the entire US (hot and dry???)
moving in from the West. Has the dome of doom arrived just in time for
June???

Stock markets are strong recently as the economy continues to grow
quickly while the Covid19 virus infections continue to fall. US deaths
May 25 from Covid19 dropped to 314, only about 11% of the April peak
which clearly indicates the worries about rapid new infections was
unfounded. In fact, its hard to imagine the reopening of western
countries would have gone so well. Given the pace of recovery so far, it
appears the worst is far behind us, and its becoming less and less likely
that the world will ever see another economic jolt like it experienced in
2020 from the Covod19 virus. Professional sports is planning to reopen
in July, and even the NBA (an indoor, packed gymnasium setting) is
planning to attempt some type of season. There still are remnants of
political power grabs (like continued denial of church services in some
states), but even that is becoming more difficult once sensible,
thoughtful preventative steps are taken. Clearly, the Covid threat is
waning tremendously, and that is giving stock markets and crude oil a big
boost. Are grains and livestock soon to follow???


Ray can be reached at raygrabanski@progressiveag.com.
+++++++++++++++++++++++++++++++++++++++++++++++++++
Ray is President of Progressive Ag Marketing, Inc., a top Ranked
marketing firm in the country. See http://www.progressiveag.com for
rankings and link to data from Top Producer Magazine and Agweb.com.

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