World Grain - March 2020 - 6

FROM THE EDITOR

Coronavirus yet another
challenge for agribusiness

ollowing a year in which the global
agricultural sector was bludgeoned by
trade wars, African swine fever (ASF)
and reduced crop output in some regions due
to extreme weather, along comes the novel
coronavirus (COVID-19) outbreak, a health
emergency that has literally paralyzed parts
of China, spread to more than 40 other countries, and left an anxious world with more
questions than answers.

The disease, which at the time of
this writing had claimed the lives of
more than 2,800 people and infected
about 82,000, mostly in China, led
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more than 150 million of its citizens,
primarily in the Hebei Province where
the disease originated.
In addition to the disease's frightening toll on humans, it also threatens
to disrupt the production, processing,
trade and consumption of agricultural
products. China is reportedly having
to reduce its poultry population as
transport restrictions in several provinces have prevented animal feed
from being delivered.
This is a troubling development for
a global feed industry that in 2019 saw
SURGXFWLRQIDOOIRUWKH¿UVWWLPHLQPRUH
than a decade after ASF led to the culling of more than half of China's swine
herd and continues to spread throughout Asia, Europe and other parts of
the world. China produced 22 million
tonnes of poultry meat in 2019, up 12%
on the previous year amid pork shortages caused by ASF.
The good news, at least on the ASF
front, according to Rabobank's China
analyst Lief Chiang, is that the ASF
epidemic is slowing in China, although
it could possibly spread further in the
ASEAN region. However, he noted that
as a result of a labor shortage (a number
6

of businesses in China were closed for
weeks) and transportation restrictions
due to the COVID-19 outbreak, some
feed mills and grain processors in the
highly impacted provinces had to postSRQHSURGXFWLRQIRUDQLQGH¿QLWHSHULRG
He added that the global feed industry
might face some supply disruptions
in lysine, threonine and feed vitamins,
as China is a major exporter of these
feed ingredients.
If all that wasn't bad enough, authorities in early February reported an
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Hunan province, resulting in more than
17,000 chickens being culled.
The upshot is that an already weakened demand for feed in China will
almost certainly decline further in the
short term. And that, of course, means
less demand for oilseeds from foreign
markets such as Brazil and the United
States. The COVID-19 outbreak could
not come at a worse time for U.S. soybean farmers who just recently saw the
8QLWHG6WDWHVDQG&KLQD¿QDOO\DJUHHWR
DOLIWLQJRIWDUL൵VLQSKDVHRQHRIDWUDGH
deal between the two countries.
1RWKLQJ QHJDWLYHO\ LPSDFWV ¿QDQcial and commodity markets more than
uncertainty, and it's hard to imagine a
more uncertain scenario than a mysterious and sometimes deadly virus spreading quickly worldwide
with little hope for a
vaccine in the near
term. That is the reality
we face in the coming
weeks as we brace for
a potential worst-case
scenario that could result in a global
pandemic and a devastating impact on
agribusiness.
Arvin Donley
Editor

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Arvin Donley
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Fengcheng Wang
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WORLD GRAIN (ISSN 0745-8991) Volume 38, issue 3,

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March 2020 / World Grain / www.World-Grain.com

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World Grain - March 2020

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