On Tuesday morning, we saw a sharp rise in stock indexes, metals, and energy markets. This came as our new Secretary of the Treasury, Dr. Janet Yellen, testified before lawmakers about how the U.S. risks a more prolonged and more painful recession unless Congress approves more aid. Yellen also said the government must "act big" to shore up the recovery. Since her attitude toward financial stimulus and low-interest rates will dominate Fed policy, markets anticipated the government would continue to support both Mainstreet and Wallstreet. The cost of financing is a major component in producing, storing, and purchasing every essential commodity and is sometimes overlooked when rates are low and less volatile.
In the longer term, Yellen’s priorities will be addressing climate change and trade with China, two of the most critical and challenging issues our nation faces.
Biden Flips Policies re Climate Change, Pipeline, Immigration
Wednesday featured the President’s very first executive orders, which returned the U.S. into the Paris Climate Accord, revoked permits for the highly controversial Keystone XL Pipeline, and included extensive immigration reforms. Biden’s Orders tended to lift prices and please some national farm organizations.
Biden’s immigration proposals established a path to citizenship for undocumented immigrants, including farmworkers. This could solve acute worker shortages, which hamper the production of fruit, livestock, and dairy. The oil industry was quick to criticize the pipeline decision, but those touting alternative clean energy applauded it. Biden’s massive roll-out plans for vaccines was good medicine for liquid fuel demand.
The President’s Friday morning announcement of a 15% extension of the food stamp program was also seen as supportive for agriculture. Still, reactions were muted as U.S. dollar weakness and weather became a bearish influence on grains.
Weather Won’t Wait for Washington
Drought conditions were eased somewhat toward week’s end as Southern California and our wheat-growing regions finally got some rain, as did most of Argentina and Brazil. Wheat, corn, and bean prices tanked and tumbled in a sharp downward correction. As of midday Friday, soybeans for March delivery traded at $13.27 per bushel, corn at $5.04, and Chicago March wheat at $6.37. March cotton brought 81.60 cents per pound. February cattle fetched $1.16 per pound. Gold, silver, and crude oil were nearly unchanged on the week.
Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, KS. He can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.