From the Ground Up: Coronavirus Stalls Increased Trade with China
The coronavirus outbreak in China has not only caused health concerns worldwide, but it’s resulted in China putting much of its economy on hold and that is having negative effects in a variety of business sectors around the globe. Agricultural commodity markets are no exception. Bart Fischer is the co-director of the Agricultural and Food Policy Center at Texas A&M.
“In this phase one agreement with China they’ve, that the president just signed, they’ve agreed to purchase eighty billion dollars’ worth of agricultural products over the next two years. Roughly the five years leading up to the start of the trade war we were exporting about twenty billion a year. Now we’re looking a forty, doubling what we send to China. But that’s a two year agreement. What comes after that? Also still unknown. I think it’s an extraordinarily positive movement right now.”
Lee Denena farms and ranches in Robertson County.
“When phase one of the China deal was signed it didn’t mean that the very next day commodities were going to go through the roof because China was going to be buying. It simply meant that that laid out a plan that China was going to try and adhere to, to show good faith in our future trading. Nobody so this coronavirus coming.”
Since China plays such a large factor in the world economy, especially as it pertains to agricultural commodities, any disruption in the supply chain is felt worldwide.
“There could be a huge vessel sitting off the coast of China ready to come in and they simply don’t have the workers there to unload it right now. They’re being told to stay home or they’re being asked to come to work and they’re choosing to stay home. I hope and pray every day that they’re able to get things figured out and get on the right course.”
Denena has put all of his marketing plans on hold.
“I marketed probably seventy percent of my grain on a rally due to the late planting in June of last year because of again the late planting in the Midwest. You never know what time in the course of a year is going to be that marketing opportunity. You have to assume right now with all of the negativity, this is not the time. Wherever the markets are now I firmly believe they’ll be higher.