Good Morning,

Markets are off sharply this morning with corn down 8, soybeans down 10 and wheat down 7. Fears of the rapidly spreading coronavirus have traders with a “risk off” mentality to start the week. All three components of the CBOT are seeing liquidation in active trading. The reason we are seeing this hurt our markets so much is that there is just so much unknown about the virus. The rapid spread of the disease is definitely alarming with the latest speculation surrounding the possibility of an incubation period of over 2 weeks before the symptoms emerge.
Deaths in China climbed to 80, the National Health Commission said on Monday. That’s up from only two just over a week ago. There are 2,744 confirmed cases on China’s mainland, and more than 30,000 people are under observation. 56M people have been quarantined in an effort to slow the spread of the disease; however, Chinese authorities said the virus isn’t yet under control despite aggressive steps to limit movement for millions of people who live in cities near the center of the outbreak. Mainland China accounts for 98% of confirmed global infections, while more than a dozen countries and territories reported the illness within their borders. The WHO said that of 29 patients with infections outside China, 26 traveled through Wuhan.
So far we have 5 cases reported here in the US and daily life has yet to be affected. 3 of them have been confirmed within the last 24 hours: two in Southern California and one in Maricopa County, Arizona. All the patients had recently been in Wuhan and are hospitalized. Their close contacts are being monitored for signs that they may be developing the disease, the Centers for Disease Control and Prevention said Sunday.
South American weather models continue to look favorable with improved chances for more normal precipitation across Argentina. In Brazil, nearly all the crops should enjoy near normal rainfall as well with totals ranging from 1.5″ to 4″. This favors a soy crop that is still in the middle of reproduction. High temps range from the 80’s to mid-90’s. Additionally, early harvest reports out of Mato Grasso have bean yields running up 5% to 10% higher than last year.
The selling this morning seems to be a bit of an overreaction to all the news from the weekend. Granted the whole situation does possess the possibility to become another “Black Swan”, but as far as the Ag community should be concerned it is probably way too early to be drawing any conclusions.

Have a Safe Day!

Garry Gard