The “unprecedented” situation and global efforts to stop the spread of the disease have implications for feed crop and livestock producers, said Scott Irwin, Laurence J. Norton chair of agricultural marketing at the University of Illinois during a farmdoc webinar on CORVID-19 on Friday.
The spread of the virus as had generated a “massive reaction” in the US commodity and financial markets, he added.
The market for live cattle has seen prices drop almost 30% so far, he said. “The grain markets have actually faired much better relative to the other markets – the corn market for the year is down about 15%.”
However, it is unclear where prices and use will go from here, he added.
Watching supply chains, feed movement
In the short term, changes to some supply chains are disruptive, but that is expected to ease, said Gary Schnitkey, soybean industry chair in agricultural strategy the University of Illinois. The primary focus should be on ensuring that supply chains are not disrupted, he said.
“Our first major concern is keeping supply chains functioning, primarily related to meat, dairy, and eggs – we have to keep those perishable commodities moving,” he said. "Hogs, cows – they have to be fed [and] we have to keep feed, vet supplies moving to those animals.”
Decisions made at state and local levels to address the disease spread should not hamper supply chain movement, he said. “We have been making the case to our public officials. "Our concerns are, mainly, around workers and transportation and keeping those transportation systems running,” he added.
However, the industry will need to plan for what happens when processing facilities have employees test positive for the disease, Schnitkey said.
“We’re likely to see spikey, erratic prices at some supply points,” he said.
Looking at the production of feed crops, it appears that products needed to start planting including seeds, chemicals and fertilizer are in place, he said. However, transportation of those products remains key going into the start of spring feed crop planting.
Maintaining an agricultural workforce that is free of the coronavirus needs to be a priority, he said. “As we’re planting here, I would suggest that if we do have a COVID-19 infected person there will be a lot of time pressures going on as we’re moving through this period,” he added.
There may also be some shifts in acres planted to corn or soybeans based on demand and the drop in ethanol use, said Schnitkey. But, it is unclear what the final numbers will be at this point.
Export markets and feed use considerations
For export supply chains, there could be some increase in export demand if transport paths remain clear, said Todd Hubbs, assistant professor of agricultural commodity markets at the University of Illinois.
“It’s just really uncertain right now, but it feels like China and the Asian countries are starting to emerge from this and buying could be there,” he added.
There have been questions about China meeting its buying obligations set out in the phase one trade deal, he said. “They got off to a slow start because of the repercussions around COVID-19 in their country. They’ll well behind what they said they were going to buy in 2020.
"I think they’ll try to buy a significant amount of ag products from the US as we move through 2020 and if there are issues in South America and other places that will benefit us, if we can keep our supply chains in place.”
However, if ethanol use continues to be down and ethanol plants go offline, corn use could be down 120-150m bushels and alter feed prices, Hubbs said.
