As the U.S. starts to incrementally open back up, the markets are waiting for those impacts to hit commodity markets.
That can especially be seen in the corn market as the hope is for more people to be on the roads and getting back to typical summer driving and ethanol usage.
“I think there will be some pent up demand for people getting out of their houses,” Jerry Gidel of Midland Research said.
“They are more likely to do that on driving their car somewhere because nobody wants to get on a plane.”
However, Gidel said while there might be excitement to get out of the house, if major cities have not opened up yet this summer, it will be a drag on just how much demand will be created.
Global Commodity Analytics’ Mike Zuzolo said most markets have already priced in worst case scenarios.
“If we have gotten through July 4, the summer grilling season and summer driving season and we are heading towards Labor Day and we don’t see a resurgence in COVID-19 and numbers aren’t spiking again, the trade will start to price that into commodities,” Zuzolo said.
The markets are also waiting for tensions between the United States and China to start to loosen and more exports to come through the markets. According to Zuzolo, a lot has to with interlinked foreign policy issues.
“They’re interwoven,” he said. “You can’t pull them apart. (Trump’s) administrations greatest weapon in getting China to the table of negotiations is the trade side of things. We are starting to see, in the northern hemisphere, attempts to restart the economy.”
Zuzolo said if the markets start to recover and there is no second outbreak of coronavirus, President Trump may not have to be as aggressive with China in the short term because of the upcoming election.
“I think he realizes his re-election success or failure is going to be related to the economy, which is related to COVID-19,” Zuzolo said.