SAN ANTONIO, Texas — Coronavirus has been spreading across the world, and the disease is drastically afflicting global markets.
As March began, the markets appeared to be calming down, but commodity prices had already taken big hits due to concerns about how the virus will be affecting global demand. Soybean futures were among the hardest hit, sinking to lows at the end of February not seen since May 2019.
Market analysts at Commodity Classic in San Antonio said they aren’t sure about lasting effects.
“We all want to know when the bottom is in,” Matthew Kruse, the president of Commstock Investments, said. “The markets were not down in just the grains, but oil and cotton. I think it’s a little overblown myself.”
Jacob Burks, a hedge specialist at Kluis Commodity Advisors, said because of the unknowns it’s understandable to see the markets react emotionally. However, it isn’t time to panic for growers looking to lock in a profitable price, he said.
“Are we going to overdo this? Yeah,” Burks said. “Is it overdone yet? That’s the hard question. We can make some optimism looking at the fundamental things coming down the road. We can get this market moved back up.”
Burks said it’s hard to compare this to past global issues, such as SARS or avian influenza. He said seeing how coronavirus slowed China to a halt for a couple of weeks adds to concern.
“That is a major blow to the world’s economy,” Burks said. “That really hurts. When people aren’t traveling, they aren’t eating at restaurants. That leads to a livestock market that is struggling to recover.”
Despite the immediate concerns about the virus, Kruse said the key point to remember is agriculture is a long game. Taking time to let the market play out should pay off for farmers.
“The numbers right now don’t support that it’s going to be the world-ending pandemic that the media seems to make it out to be,” he said. “You just have to let it run its course. It’s already here in the United States, but ultimately, things will improve.”
A few days after Commodity Classic, DTN market analyst Todd Hultman spoke at the Hills Bank 2020 Ag Outlook conference in Riverside, Iowa. At the event, he had a similar message for the farmers who are worried about the disease.
“There are 7.77 billion people on this planet that do not have the coronavirus,” he said. “They are going to want to eat something and they might want to have more than one meal. That is a perspective that we need to bring to the market. We have to remember that this is a big world.”
Hultman said coronavirus isn’t the major issue with price direction right now. While the virus is having an impact, other factors are adding to the market downturn. Lower possible GDP growth for the U.S., logistical issues with transportation in the midst of the virus and African swine fever and a pullback in economic activity are major factors that are impacting prices as well.