The Good: Stock markets are on a roll this week as investors are beginning to develop FOMO (Fear of Missing Out) and rushing back into the market. The weekly chart for the S&P 500 index in the U.S. is hitting levels that were last hit in the first week of December of 2019. Let that sink in for a minute. The business news is filled with negative stories on revenues and economic data has been as poor as it gets. The stock market has essentially voted over the past two months that the recovery will be V-shaped. There is no question that the actual economic recovery will be slower than the markets are indicating, but the rally in the stock market is very good news.
The Bad: Although planting is largely done in the Prairies there is still a substantial amount of acreage left to plant in northern Alberta and the Peace River region. The forecast is not bringing any help to farmers in this region over through the weekend. The heaviest rainfall over the next five days are going to be located in northern Alberta and the Peace River region. Hopefully we get a break in the weather soon in order to get all of the 2020 crop planted.
The Ugly: Agricultural futures were mostly up today, but corn markets were mostly lower. We don’t grow a lot of corn in Western Canada, but the Chicago corn futures are very important in supporting prices for the feed grain market. The problem with corn is really an ethanol issue. Ethanol production is slowly recovering, but the current production rate was only 765,000 barrels for the week ending on May 29th. Ethanol production needs to recover to over one million barrels per day in order to increase the corn use to levels that are close to the prepandemic levels. Until that happens, corn prices will be in the doldrums.