Uncertainty in ag markets amid coronavirus spread

The Kessel's Arrow K Farm silos that are 36 ft in diameter and hold 25,000 bushels. (Photo courtesy of Jade Kessel)

DICKINSON, N.D. — The coronavirus outbreak has been among the top health stories of the year, but close to home, the virus has raised concern among agriculturists and agronomists.

“Markets do not like uncertainty … We thought we were heading to more certainty after signing the trade agreement, but the coronavirus threw a monkey wrench into that,” said Tim Petry, a livestock economist at the North Dakota State University Extension Service. “How severe it's going to get is the big question… The ports being clogged up, roads being closed and workers being sick is causing a natural blockade to trade.”

The spread of the coronavirus outside China and into Europe has only added to the growing uncertainty in the markets — causing exports to move slowly and prices to drop.

Arrow K Farms out of Belfield grows malt barley, food barley, forage barley, yellow peas, hard red spring wheat, hard white spring wheat, corn and soybeans.

“Because of the lack of movement of grain into China, we have seen the ripple effect on our markets here,” owner Greg Kessel said. “Some commodities aren't moving and others have seen a price decrease.”


The Kessel family is not alone in this struggle, according to Petry, with a large portion of North Dakota agriculture dependent on exports.

“We are very dependent on the export market. With the signing of the phrase one trading agreement with China in January, there were expectations that we would start seeing improving prices,” Petry said. “The coronavirus that is in China is causing a lot of uncertainty and perhaps causing Chinese companies to be reluctant to place orders.”

“This unknown has put a lot of negative pressure on prices and agriculture prices. Grain as well as livestock has been caught up in this big swirl of uncertainty. So it's not that the coronavirus is going to directly impact people’s eating habits, but agriculture is one of these industries that got caught up in this whirlwind of concern and worry,” said Frayne Olson, NDSU Extension Service crops economist/marketing specialist. “We just don't know what is going to happen, and as a result, people get very conservative and prices start to fall.”

What the Kessels do have going for them during this slow period is their state-of-the-art bins that are 36 feet in diameter and hold 25,000 bushels each.

“Because of our storage abilities, we will store until a market opens up or prices improve,” Kessel said.

White House officials have said agricultural exports to China under the phase one deal would be between $40 billion and $50 billion in each of the next two years, but have provided few other details.

“For the grain and livestock market, this is a matter of timing. When will China make these additional purchases? The concern right now is because of the coronavirus and because of the focus on trying to control that. Purchasing U.S. ag products has fallen down the list of importance for China,” Olson said. “We may not see the purchases as quickly as we were hoping for and that does have an impact on local elevators … The sooner we can start increasing those trade volumes, the better off North Dakota farmers are going to be.”

Olson added, “So far, the Chinese government has said that, even though we have this virus, we are still going to do everything we can to live up to the agreement,’ because there is a clause in the phase one agreement that if something out of the ordinary occurs or if there is a drought or some major event, they do have the ability to come back and negotiate.”

Josiah C. Cuellar was born in San Angelo, Texas, a small rural community in the western part of the state known for its farming, ranching and beautiful Concho River. A Texas A&M San Antonio graduate specializing in multi-media reporting, Cuellar is an award winning photographer and reporter whose work focuses on community news and sports.
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