Market analyst: Spend our way out of trouble

Ray Grabanski
Special to the Farm Forum
Columnist

Markets are on hold, trying to see what will happen with government policy this week as the U.S. Congress votes on $5 trillion of new spending bills.

To put that into perspective, the entire U.S. GDP is about $23 trillion.

So, the U.S. is proposing spending 20% of the annual productivity of the largest economy in the world this week. Is anyone alarmed yet?

They are spending 20% of the entire U.S. productivity in one week! 

The previous high was $3 trillion last year. 

So, prepare for inflation hedges. People with money and property always gain from inflation — not the poor.  We all will have to pay for it with higher costs for everything in devaluation of currency via inflation.

That means getting $1,400 from the government, and government causing 10% inflation, will mean anyone making more than $14,000 is actually poorer unless you own inflating property.

If you don't get government money, you always lose. Get used to thinking this way, as that's what inflation does.

Weather forecasts are wetter, with above normal precipitation forecast the next week in the southern half of the U.S. and above normal in the Corn Belt in days 8-14. This is a big change from the warm/dry weather previously forecast.

Temperatures are still forecast above normal, but wetter, which is a more bullish forecast than before. This will create some difficulty with harvest.  But for the most part, crops are drying much faster than normal, and harvest is well ahead of normal at this point.  

In a positive move for U.S. agriculture, U.S. exports are very poor so far for September (much below last year), so we really need a boost in the arm. U.S. ag sales to China rose much more with a successful Trump trade deal with China.

The Biden administration, so far, has done nothing with further trade deals; will it ever come? Hopefully, Biden's softening on China won't hurt grain sales, as he shows an inability to confront China on trade deals and hold them responsible for any wrongdoing.

Everyone please have a safe and successful harvest, as harvest heats up across the Midwest this week.

Eighteen percent of corn is harvested so far (3% ahead of normal), and soybeans are 16% harvested (also 3% ahead). Crop conditions are steady this week at 58% good/excellent for soybeans and 59% good/excellent for corn. The Pro Ag yield model for corn is 177 bushels per acre (versus 176.3 bushels per acre, according to the USDA), and 49.1 bushels per acre for soybeans (versus 50.6 USDA).

It seems soybean yields might need to be reduced, while corn yield estimates by USDA might be on target. We'll see now that lie detectors (combines) are in fields!

Ray Grabanski can be reached at raygrabanski@progressiveag.com.