What does the coronavirus mean for agriculture?

Steve Cornett

The coronavirus disease seems to be developing into a pandemic, threatening a global recession, and cattle market analysts are wondering how far it will go and how bad it might be for beef markets. “We’re in uncharted territory,” said James Robb of the Livestock Marketing Information Center. As the U.S. Centers for Disease Control (CDC) suggested in late February a “high probability” of the U.S. being afflicted, live cattle futures dropped $7 in two days, Kansas sold fed cattle $5 under the previous week and auctions reported sharply lower calf prices. Jeff French, analyst with Top Third Ag Marketing, told CNBC, “The market is suffering from the ‘get-me-out’ mentality. At any cost, funds are liquidating their long cattle positions.” Analysts think that might be overreaction. While acknowledging a potential threat, David Anderson at Texas A&M University (TAMU) suggested it might just be “traders doing what traders do,” assuming the “worst case scenario.” Mike Sands at MBS Research feels the same. “I think there is some threat to the world in general, and the U.S. in particular, may be overreacting to the threat of the virus.” He says the U.S. is better prepared to control the virus than other countries and the new organism is not nearly as dangerous as SARS and MERS, both of which seem to have been contained. Brady Miller at the Texas Cattle Feeders Association said he hasn’t sensed any panic among members marketing cattle. “They’re just scratching their heads,” he said, wondering what’s next. “A recession won’t be good for the market,” he said, “but I don’t think we’re ready to jump off a cliff.” And, for that matter, if this follows the route of similar viruses—like seasonal flu—it may all be history by time to market fall calves...MORE