Coronavirus crushing US farm commodities

Coronavirus crushing US farm commodities

  • US farmers are bracing for tough times as Coronavirus persists
  • Both wheat and corn demand dropped, but the latter maintained a slightly stronger position due to its use in the production of ethanol
  • Slowed operations in the hotel sector have also resulted in a dip in demand for beef, a major export commodity of the United States

Despite numerous efforts by President Donald Trump’s administration, the US farmers continue being hit by the escalating panic over Coronavirus. The killer virus has to date claimed thousands of lives globally, while interrupting business operations in one of the world’s largest economy, China.

But the Asian nation isn’t the only severely affected country; the US, which has of today reported eleven deaths resulting from COVID-19, is among the most hit, considering the recent phase one deal that saw China and America ease a months-long trade war.

Traders are growing more worried by the day, with most predicting for a bleak future. Beef prices have recorded steep drops while grains fell slightly.

According to Jeffrey McReynolds of commodity brokerage firm McReynolds Marketing and Investments: “The markets have gone down because the method used to fight the outbreaks brings economic activity to a near standstill, which hurts demand. This is not about the body count.”

The decline in commodity prices is primarily caused by the fear of closed factories and restaurants, as well as quarantines, McReynolds added.

Johns Hopkins School of Medicine has reported the presence of more than one Coronavirus, further destabilizing the already-anxious market. The news comes days after Chinese scientists discovered the presence of more than one type of COVID-19 among the affected people, implying the killer virus could be mutating.

Researchers from various institutions around the world, including Kansas State University, are working on ways to combat the virus.


Despite the declined in the prices of futures of grains, US local market prices are holding up well. Local cash markets are still displaying some strength.

Wheat is maintaining a stronger value compared to corn, which is faltering due to its continued use in the production of ethanol.

As long as gasoline remains cheap, it will be difficult for ethanol to trade competitively thus triggering a drop in its blending, McReynolds stated.


Unlike grains which can be stored, animals are a breathing, living commodity with short shelf life. Meat is the most affected product following a dip in the farm commodities. Subsequently, as the restaurants business slows down following the virus outbreak, the demand for beef drops, negatively affecting the US farming sector, which is heavily reliant on beef exports.

“It’s going to really hurt incomes. If you’ve got cattle that are ready to go, it’s just going to be tough,” Clay Simons, executive Extension agricultural economist at the South-Central K-State Extension Office said.

By Damian Wood
As an experienced trader, I work for myself managing my own small portfolio and also contributing on several investment news sites. I mix my passion for the industry and journalism to bring my readers informative and trustworthy articles.

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