I keep a very close eye on commodity and equity markets. Lately, this hasn’t been much fun! There is a stream of red flowing across the screen almost every day that can feel like the last bit of life being sucked out of the farm economy. Farmers were hoping for price bumps following the USMCA and Phase 1 China deal signing but have seen billions of dollars taken out of the rural economy by a new market disrupter: Coronavirus (COVID-19).
As I write this, there are more than 80,000 confirmed cases worldwide and nearly 3,000 deaths. No doubt that number will be higher when you read this. The impact, however, isn’t just the tragic loss of life, but the uncertainty of how much worse it might get. That uncertainty has the markets in a panic.
I’m not qualified to describe the virus itself or even say how bad it truly is or could be. All I know is that this will pass, and markets should rebound. In other words, the sun will eventually come up.
The fundamentals of commodity ag are still strong. Growing population and higher protein diets create a rising tide of demand that points to better future prices…probably not like the boom of 2013, but stronger prices that support profitable farming.
With spring just around the corner, what can farmers and seed companies do?
It’s during these times that businesses and farmers need to keep their long-term strategies front and center. Take a step back from the constant news coverage and really evaluate what you can control on your farm or in your business. Don’t make any short-term decision that doesn’t align with your long-term vision. This is much easier said than done, but you’ve been through uncertain times before. The ebbs and flows your farm and business have weathered over multiple generations is the evidence that maintaining your long-term approach will serve you best.
The Coronavirus fears and impact on the market are not likely to end soon. But they will end. Health organizations around the world are partnering with every major country, the best health professionals and leading companies to combat the spread of this virus. When the battle against Coronavirus is won, the positive fundamentals for agriculture will still be there. Your farm or business will be in a position to capitalize on that future by ensuring your short-term reactions stay in line with your long-term strategy.
