Government stimulus packages are helping support prices, a commodity analyst said
By Diego Flammini
Commodity prices were up Wednesday morning after several governments around the world took action to stimulate economies amid the COVID-19 pandemic.
May futures for wheat were up 14 cents on the Chicago Board of Trade to US$5.75 per bushel as of 11:45 a.m. ET Wednesday. Corn and soybean rose by 2 cents per bushel each to US$3.49 and US$8.85 per bushel, respectively.
Markets are showing signs of confidence as federal legislators around the globe signed massive financial packages, said Abhinesh Gopal, a commodity analyst with Farms.com Risk Management.
“The US$2-trillion stimulus package from the U.S., which is the biggest in history, has been supportive for all markets,” he told Farms.com. “Canada has approved a big (CA$82-billion/US$57-billion) stimulus package and other major global economies are doing the same.”
Australia, for example, announced AU$189 billion (US$112 billion) of measures to combat the affect the virus is having on that country’s economy.
Export demand and operational changes in different countries have helped boost crop prices.
China is buying U.S. grains, and coronavirus measures in South America are beneficial for grain prices, Gopal said.
“Argentina and Brazil’s current port issues, including threats of strikes and new safety protocols for coronavirus, are supportive for U.S. exports,” he said.
In Brazil, the local government of Canarana, an important ag community in the country, halted grain exports out of the city.
Grain companies have 10 days to comply with the order.
China’s recovery from the coronavirus will help support prices too.
“China is rebuilding feed demand as the country tries to move beyond ASF and coronavirus,” Gopal said.
For producers considering pricing in some grain, Gopal suggested staying up to date with local companies.
“Check with local elevators and see if you can get some basis booking done if values have improved locally. They should have, especially for wheat,” he said. “And follow the futures markets closely to stay on top of the current net cash values at the elevator.”