Analysts from the CME Group say that this year will be a different story from 2020. However, the global economy will not go back to pre-COVID conditions anytime soon.
One of the factors that will influence the ag markets is China’s economic recovery and weather will affect how China purchases commodities to meet its demand. This will impact how many acres U.S. farmers plant for each commodity.
“That, of course, impacts how China will be buying its demand for corn and soybeans, because they used to buy most from the U.S., and then they started to split their purchases after the trade tensions, but now, it’s going to be in some ways supply-constrained,” CME’s Chief Economist Blu Putnam explains. “We’ll just have to see how the crops show up, but I can tell you at these prices, North American farmers are going to plant land they didn’t even know could produce. You have very, very good conditions for planting a lot of acres this spring in the U.S. Corn Belt. So, there’s a lot of different influences on ag prices, from China, to weather, to how we plant the crops.”
Drought is another potential challenge, but Putnam says that a modest drought in North America is less of a sure thing.