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Wheat prices rise, overall, as bread demand rises, analyst says

As the COVID-19 coronavirus progress goes, so goes the markets, analyst says.

There are signs that the U.S. government response to the coronavirus pandemic may be close to ending, but the pandemic itself is not likely to end for some time.  

The count in the U.S. is at 46,450 people infected today, a number that has doubled every two to three days for quite some time. So the spread in the U.S. is not being contained, but instead is quickly spreading. 

READ MORE: Three new products for wheat

We also know that this number is low for a number of reasons: 

1. Probably 50% to 75% of young people don’t even know they have it, so they never get tested. So, we could have 3x to 4x the number infected that official numbers say.

2. It takes about five days to detect the virus, so the actual infected numbers are probably 2x to 4x higher than confirmed cases due to a delay.

3. As the infections spread, there is little reason to continue to report every flu-like symptom as the medical profession is overwhelmed already. Actual infections in the U.S. could be closer to 200,000, but at this point it might not matter anyway as that is only about six to seven days difference between 46,000 and 200,000. The point is the China virus is unlikely to be stopped in the West like it was in China.   

Wheat is now trading higher than before the virus sell-off occurred 2/21, up 0.5% in price (+3¢) as bread is flying off of the shelves in the U.S. along with crackers, eggs, milk, and pasta. Consumers are stocking up on necessities, and providing for that demand (not passing government laws restricting the pricing) is the key to success in a market-based economy.  

While wheat is a necessity and probably one of the best foods God ever made, demand for other products that are not necessities is waning.  

Things like trips to Disneyland (which is closed), sports events (closed), restaurants (mostly closed), casinos (closed), airline travel (mostly closed), auto manufacturing (closed), etc. Big durable items are also mostly not being produced – but no one is calling for food production (or TP production) and delivery to be closed. These are necessities and will not be closed, or the country (and all of us who like to eat) are in big trouble.

Soybean prices are also rising recently, but still are 2.5% below the February, 21, 2020, price level.  But corn is down 10% since 2/21, hurt by the ethanol/energy price fiasco where energy prices are less than half (46%) of the 2/21 price level. That 54% price drop in crude oil in one month has devastated ethanol plants, and corn prices are struggling – not as a feed or food but the fuel portion of corn prices (about one third of demand) is killing the corn price.  

Politicians are fighting to see who can give more government aid (note that’s our money, not theirs) to the coronavirus fight. It reminds me of one of my father’s sayings: “Beware of the most often repeated lie in human history: ‘I’m with the government, and I’m here to help.’  The virus will not be defeated by governments, it will be defeated by people: you and I.  Like everything else that is ever done on earth. It’s called personal responsibility, and we all pretty much already know what we have to do.

READ MORE: Army cutworms marching into Great Plains wheat fields


Ray can be reached at raygrabanski@progressiveag.com.  
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Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country.  

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