As worries about coronavirus spread, impacts have already been felt globally in the grain markets.
It was a tumultuous couple of days near the end of January when reports of the disease started to dramatically affect the markets, highlighted by multiple double-digit overnight losses in the soybean markets.
However, much of the reaction was due to the shock factor of the headlines, said Jack Scoville of Price Futures Group. Now, the markets are starting to settle back.
“You can’t really plan for that,” he said. “Even though it’s still spreading, the worst of the shock is over. The Chinese have said that they plan on honoring their agreements with us — at least that’s what (the United States) says the Chinese have said.”
February is a time when the grain markets are especially susceptible to global headlines, as there isn’t much production news domestically to impact markets. Other than the occasional Supply and Demand report, it’s still too soon to react to any worries about the upcoming spring and summer.
That includes recent snows that have piled on to the snow pack in the upper Midwest, which could create another year of flooding in major crop areas.
“You have to wait a couple of months,” Scoville said. “It’s way too early. It’s something to be concerned about — there’s certainly a lot of rain and snow — but it’s way too early to worry about (for traders).”
Scoville said he’s focused on what the U.S. might start exporting to China and other areas for the moment. Seeing China confirm its demand with actual purchases sooner rather than later is going to be key for the grain markets, he said.
Scoville is also keeping an eye on weather in South America as Argentina and Brazil prepare for harvest.
“The weather in Brazil is good,” he said. “In fact, it’s probably a little too good. It’s a little wet, and that might slow down harvest a little bit. It might affect the corn crop if it gets to be a dramatic delay.”