The first reported case of COVID-19 in the United States was Jan. 20 in Washington state. Since then, the virus has been reported in all 50 states and U.S. territories. According to the World Health Organization, a total of 3,503 cases have been confirmed in the U.S. as of March 17, with a total of 58 deaths due to local transmission, where the source of the infection is within the reporting location.

The topic of coronavirus was on many minds at Commodity Classic in San Antonio, Texas, Feb. 28. At that time, farmers were just starting to be aware of how a virus that originated in Wuhan, China, could possibly affect their business interests in the U.S. in the coming months.

Samuel Taylor, vice president of Farm Inputs at Rabo AgriFinance, explained the situation at that time and reminded farmers that the situation is evolving as what the WHO now calls a pandemic. But to understand what could happen, it’s first advisable to realize just how intertwined China is with U.S. agriculture, from the NPK and active ingredients that we import for our crop production, to amino acids and animal nutrition.

“So, we have a huge exposure to China and what happens in China will have an impact on what happens and how we put things in the ground going forward,” Taylor said.

The outbreak started in the Hubei Province of China, which accounts for about a third of all manufactured Chinese fertilizer, Taylor said. At the height of the Chinese infection curve, in late February, those plants were running at 55% to 66% capacity, so that had a significant impact on supply and demand going forward through the chain, he explained.

“The Chinese efforts to curtail the outbreak happened at the height of the Chinese New Year, when many of their citizens return home to celebrate with their families,” Taylor said. But, with quarantines in place, those people were unable to return to work. This supply and demand situation could prove interesting for North American farmers going into the spring planting season.

“If you’re a risk tolerant farmer, look for downward pricing on nitrogen and potassium derivatives; if you’re conservative farmer, lock in your potash prices if you’re planning for spring application,” Taylor said. So far, there’s a decent supply on the market at present to fill the need.

It’s not just the farm economy that could feel the chill from this virus, Taylor said, considering that China is a large importer for ammonia for industrial uses beyond agricultural uses. You could see a short-term industrial slowdown, Taylor warned, and then see those prices trickle down into North American benchmarks, pushing into an economic recession.

The economic impact from a global pandemic like COVID-19 is still unfolding and changing day-by-day. Farmers will need to stay on top of it going into this spring’s planting season and maybe even longer.

Jennifer M. Latzke can be reached at 620-227-1807 or jlatzke@hpj.com.

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