MANKATO, Minn. (KEYC) — As coronavirus continues to cause concern around the world, the global economy is feeling the effects, that includes the agricultural commodity trade, presenting another factor of uncertainty for the agriculture industries.
A level of uncertainty comes with the effect of coronavirus on the ag commodity markets, but concern currently lies in the movement of ag products.
“Whether we’re shipping products overseas and not just to China, but other countries, obviously with South Korea being a major ag trading partner, some of the European countries, and as we start to restrict trading, obviously the trickle-down effect does affect prices here in the U.S,” said Kent Thiesse, farm management analyst with MinnStar Bank in Lake Crystal, Minnesota.
“You do have just a slowdown coming on, especially in China and a few other parts of the world where things just aren’t moving and so what happens then is meat, in our example, whether it be pork, beef and chicken is starting to stack up in freezers or cold storage in the United States,” Minnesota Pork Producers Association CEO David Preisler explained.
Also affecting demand for U.S. agricultural products is the strength of the U.S. dollar.
“The United States is still viewed as the place with the least amount of risk and, so, what’s happened there is just in the financial markets, the U.S. dollar has gotten a little stronger with capital coming into the U.S. and so a stronger dollar makes our exports more expensive,” said Preisler.
Long term effects range from exports to imports as producers import specific products from other countries, including phosphate.
“Make sure any supplies of things you need, whether it’s fertilizer or other products that could be affected, that you maybe got your things locked up on prices,” said Thiesee.
China’s Tariff Commission of the State Council announced about two weeks ago they are accepting applications for tariff exclusion for companies in China that wish to purchase U.S. products, including several agricultural commodities
China’s efforts to contain the coronavirus could also involve the purchase of medical equipment from the United States.