The Good: The TSX composite index moved over one per cent higher today, despite lower U.S. markets. There have been larger moves higher during the recovery in the stock market, but this is important for commodities. Despite pressure in the physical crude oil markets, the prices for energy stocks have started to rally from the depths of the lows established in March. The increase in the energy stocks points to rising optimism by the equity markets that a recovery is underway.
This should help all commodities, including the agricultural futures. Demand for agricultural products has been strong over the economic shut down, but the biofuel sector has been hurt by poor demand. Markets are beginning to price in a recovery in demand over the next two months.
The Bad: The Canadian dollar continued to rally and pushed through the 71 U.S. cent mark today. This is normally good news if you were headed across the U.S. border for a quick shopping trip. Since you can’t make that quick trip nowadays, the downside of lower farm gate returns is not welcome. The Canadian dollar increase is likely going to be temporary as the economic news over the next months will be brutal. David Rosenberg, a noted economic forecaster, expected the dollar to drop into the 60 to 65 U.S. cent range over the next year. MarketsFarm is a bit more optimistic than that forecast, but we do expect the dollar to spend more time below 70 U.S. cents than above over the next year.
The Ugly: COViD-19 cases in the U.S. topped one million cases today and the death toll moved closer to 60,000 deaths. Canadian cases moved above 56,000 people and deaths in Canada have totalled 2,859.