Along with several OPEC members, Russia announced they would keep their production cuts, adding fuel to the sharp rally in place since last May. World oil demand has been recovering as the pandemic has been subsiding. A decline of several million barrels per day in Texas and nearby states during the snowstorm and record-breaking cold has also energized the rally. Farmers tend to be hurt by higher fuel prices but with ethanol and bio-diesel diesel in the mix, corn and soybean oil benefit from the increased demand. Crude oil as of midday Friday traded at $66, up about $4 per barrel from last week.
Vilsack Voices Optimism
Our new Secretary of Agriculture spoke throughout the week about including farmers in new income streams. In his plan, farmers wouldn’t be limited to growing and selling their crops but would lead our response to climate change challenges. Vilsack predicted carbon sequestration, new technologies, better use of ag waste and expanded markets would create new revenue. The use of government programs will enable commodity production to develop and adopt climate-smart agricultural practices. He also addressed hunger and nutrition insecurity, suggesting healthier food choices are on his agenda.
Nasdaq Takes a Nosedive
The tech-dominated Nasdaq led the way south as all major stock index futures continued their tumble this week. Fears of rising long-term interest grew as Federal Reserve Chairman Jerome Powell did little to reduce anxiety regarding long-term rates. On Thursday morning, Powell made no assurances the Fed would buy more long-term treasuries to keep yields down. The U.S. dollar rallied all week on the same news and views. The March Nasdaq traded at 12,400 points, down roughly 450 points from last Friday.
Biden calls Mexico’s El Presidente
President Biden continues to connect with world leaders. This week he spoke with Mexican President López Obrador. Mexican imports to the U.S. have been on an upward trend going back decades. They mainly buy our grains, oilseeds and meat, as their demand for those commodities outsizes Mexico’s production capacity. We mostly buy their vegetables, fruit and beer. One idea floated during Biden and Obrador’s talk was allowing migrant workers to fill the gap in U.S. agricultural labor shortages, although they reached no agreement. The Mexican peso futures contract was at .4693, down from last week.