Commodity experts scared by coronavirus
PALM SPRINGS, Calif. – Commodity experts at the International Sweetener Colloquium here today signaled that the announcements of the spread of the coronavirus and the fall of the stock market are making them uncertain about the future.
“Fear is gripping … the entire supply chain,” said Lucas Fuess, director of dairy market intelligence for HighGround Dairy, during a discussion of the outlook for ingredients prices.
“It is a really tough position, an unprecedented situation,” Fuess said.
New Zealand has experienced a drought which would normally cause dairy prices in other countries to be bullish, but that hasn’t happened, Fuess said.
Dairy prices have risen compared to recent bad years, but the coronavirus could pull dairy prices down, Fuess said. “It is a time that makes price forecasting extremely difficult. From a trade and risk perspective, it is a really tough ballgame,” he added.
Stephen Nicholson, a senior analyst for Rabo AgriFinance, added, “We have to be ready for more volatility as we see trade disrupted. We are going to see economic activity contract. There’s probably a little more downside than we had thought.”
In China, Nicholson said, instead of going to restaurants, people are buying vegetables in food stores and taking them home to cook, which will really affect the restaurant business, he said.
Nicholson also said that he is not in the camp of people who are sure that the Chinese will fulfill their promises to buy $40 billion to $50 billion in agricultural products.
Commodity prices are low, he noted, which means that the Chinese would have to buy a lot of products to spend that much money.
If the Chinese don’t live up to their purchase promises, in the fall the Trump administration “will have to make a tough decision on whether to punish them,” he said.
The sugar buyers attending the conference are trying to make decisions in light of higher sugar prices and a possible U.S. shortage due to the weather problems in the Midwest, Lousiana and Mexico, but Nicholson noted that for many other commodities prices are low and there are buying opportunities.
The Trump administration said today that China is planning to make purchases, but AgriCensus, a London reporting agency, pointed out that almost all the soybeans Chinese buyers have booked recently have been from Argentina and Brazil.
The conference took place today as the stock market fell for the second day in response to the U.S. government sounding alarms on the coronavirus, The New York Times reported.
White House economic adviser Larry Kudlow said the United States has contained the virus, CNBC said.
–The Hagstrom Report
Support Local Journalism
Support Local Journalism
Readers like you make the Tri-State Livestock News’ work possible. Your financial contribution supports our efforts to deliver quality, relevant coverage of the livestock industry.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Each donation will be used exclusively for the development and creation of increased news coverage.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User