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Opinion: Agricultural Commodities Poised to See Prices Fluctuate Amid Covid-19

By Wang Junhai / Mar 30, 2020 03:43 PM / World

Photo: VCG

Photo: VCG

The disruption of international transport and supply chains caused by the global Covid-19 pandemic could create volatility in China’s agricultural commodities markets, especially among areas reliant on imports. These issues could be exacerbated by the reemergence of pests and diseases that could further constrict supply.

As the world’s top importer of soybeans — a key material for edible oil and agricultural feedstuff, China imported 85 million tons of soybeans in 2018, accounting for 85% of its total soybean consumption that year. South America, the main producers of soybeans, has revised up its output forecast for 2020 to 102.4 million tons. The possible increase in supply could see downward pressure on prices.

On the other hand, if countries there fail to control the spread of Covid-19, national lockdowns could be implemented. This would lead to soybean shipments grinding to a halt, and subsequently causing shortages in China later this year and driving prices up.

A similar situation could also play out in corn markets. China’s corn production is expected to drop by 18 million tons in 2020, which could lead to higher prices. The potential reemergence of the fall armyworm, a pest that can devastate corn crops and is widespread in China, would also put upward pressure on prices.

The price fluctuations of both corn and soybean will also be influenced by the recovery of the country’s poultry sector following the stabilizing of Covid-19 on the Chinese mainland, as this would heavily affect demand.

These contradictory and opposing forces could all lead to massive price fluctuations for agricultural produce and goods.

Read the full story on Caixin Global later.

Contact translator Lu Yutong (yutonglu@caixin.com)

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