Coronavirus Still a Threat to Livestock Markets

NCBA Coronavirus Phase One 020720

The fate of the coronavirus still impacts the cattle markets. Earlier at the Cattle Industry Convention and NCBA Trade Show, USDA Secretary Sonny Perdue addressed the scare of the coronavirus to the beef industry. It still remains a threat today.

Perdue talked to the media and said how it’s hard to know how long the coronavirus will be an issue. This comes during a time when China is supposed to buy more ag goods following the Phase 1 trade agreement.

“From the United States’ perspective, we would be understanding,” said Perdue. “Like I said, if we don’t see [China] going to other places and trying to fulfill those needs other places, if they’re really trying and blowing the economy out of the water [then] I think we would be understanding of that all.”

Perdue said if China doesn’t import U.S. ag goods because of the coronavirus and instead only imports ag goods from other countries, it would be the job of the U.S. Trade Representative office and President Donald Trump to potentially be understanding or take action. This comes at a time when the U.S. and China recently signed a Phase 1 trade agreement.

At the same time, Bloomberg is reporting that China ordered about 10 cargoes of soybeans the week of February 2 from South America, despite China’s coronavirus concerns.

The coronavirus discussion at the Cattle Industry Convention and NCBA Trade Show didn’t stop with USDA’s ag secretary Sonny Perdue. Producers and economists alike are trying to figure out just how long it will impact the markets and how it may impact beef exports in 2020.

“It scares me,” said Dale Cambre, a cattle producer from Baton Rouge, Louisiana. “It should scare anybody. We just don’t know what’s going to happen.”

Whether you talk to cattle producers or the Secretary of Agriculture, the fate of China’s coronavirus problem is uncertain to those at the Cattle Industry Convention and NCBA Trade Show.

“We don’t know when this coronavirus will be corralled,” said Perdue. “We don’t know how long it will go on.”

“We could be two to three weeks away from finding out [if] it’s a much bigger scale than it appears right now,” said Derrell Peel, an extension livestock specialist with Oklahoma State University. “If that happens, then I think we have to be very concerned about it. It could have an impact on not only them, but really, on a global scale.”

It raises a concern about impacts to China’s gross domestic product following quarantines and travel bans.

“The business travelers around Asia are staying at home and not going on the road,” said Will Sawyer, an economist with CoBank. “That’s going to hurt the economic growth in the first quarter. There’s some talk of [China’s GDP] of not 6 percent growth but 3 percent growth. [If realized, it could be] half of what’s expected.”

The coronavirus is rocking the livestock markets. The April live cattle contract dropped to its lowest price since October 2 during the week of February 2.

A Hong Kong based investment firm, Gavekal Research Ltd., says the coronavirus could potentially peak in early Marchaccording to Bloomberg.

China’s Global Times reporting a decision on launching a consultation with the U.S. on the disaster clause is unlikely until the end of the first quarter.

The U.S. Meat Export Federation (USMEF) follows beef exports to countries throughout the world. They don’t have official January export numbers yet. However, they have some import numbers and don’t see a slow-down in China’s import numbers of U.S. beef yet.

“I would say we haven’t seen a slowdown outside of China but it’s probably a little too early to tell [if China is slowing down beef imports from the U.S.],” said Dan Halstrom, the president of USMEF. “We were an $80 million market to China last year. It’s less than one percent [of the U.S. beef market].”

As producers are optimistic about the future, they celebrate the victories while watching closely the things they can’t control.