TFM Perspective 4-17-20



As covid-19 continues to spread worldwide and countries act, the net effect is a major slowdown in consumption. At least in certain areas. Social distancing and isolation, perhaps the best weapons to combat this pandemic, will continue in the months ahead. Will consumers slow their appetite for agricultural products? Maybe. Or, maybe not. The form of consumption will likely change in the short term and, in some ways, maybe forever. We doubt the forever, yet when in the middle of something so impactful, imagines can run wild as scenarios are considered. Will we consume high-end foods? Will sit-down restaurants become a distant memory? Only time will tell, yet it is unlikely there will be major structural changes to industries or consumer behavior in the longer-term.

While it is true that consumers are not eating at restaurants or buying hot dogs at ball games, feverish buying of staple goods from supermarkets suggests a different usage pattern. Growing unemployment implies more breads, pastas, and potatoes to stretch dollars. Meats flew off store shelves and continue to be in tight supplies, as worries about travel bans and availability have become more real. As packing plants deal with the virus, the net effect here is more supply held by producers and less immediate supply for consumers. These are challenging times for all in agriculture. Yet, these are likely temporary – at least in terms of months, not decades. While perception is the new reality as the world adjusts, it is unlikely there will be long-lasting implications, once the virus spread is slowed significantly or a vaccine found.

The world has evolved dramatically over the last twenty-five years, as technology and commerce have touched all aspects of most of the world’s population. Innovation and the human drive to better ourselves will return. Lessons will be learned, and once consumer confidence returns, most people will revert to “old habits” and pick up their lives where they left them in February. The “invisible hand,” a theory introduced by Adam Smith (noted historical economist), will steer supply and demand. For now, however, we are dealing with the new reality as it touches every aspect of our existence in some manner. Hopefully, soon we revert or our old reality.

If you have questions or comments, contact Top Farmer at 1-800-TOP-FARMER extension 129. Ask for Bryan Doherty.

Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.


Kelly Rubisch

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