The USDA opted to leave ending stocks unchanged on corn, soybeans, and wheat from the February release. This kept ending stocks estimates at 1.892 billion bushels on corn, 425 million bushels on soybeans, and 940 million bushels on wheat. While not unexpected to be held steady, more analysts are predicting reductions to demand in future balance sheets as weekly sales start to slow. The USDA did lower the average cash prediction on corn and soybeans by five cents each.

Global ending stocks were little changed as well. The world corn carryout is now pegged at 297.3 million metric tons compare to 296.8 million metric tons in February. The world soybean carryout estimate jumped the most, going from 98.9 million metric tons to this month’s 102.4 million metric tons. The world wheat ending stocks estimated decreased from 288 million metric tons last month to a current 287.1 million metric tons. While a reduction, the wheat inventory is still record large for this time of year.

Only minimal changes were made to South American corn and soybean production. Corn production was left unchanged from last month with Brazil at 101 million metric tons and Argentina at 50 million metric tons. Soybean production increased in both countries though, with Brazil now at 126 million metric tons and Argentina at 54 million metric tons, both of which are at 1 million metric tons larger than in February. Given recent weather in South America, these are the numbers that trade seemed to question the most.

One of the most influential stories we have seen in the commodity market for the past several weeks is the outbreak and spread of the coronavirus. This outbreak has had a considerable reaction to both commodity and equity markets around the world as the disease continues to spread. The difference between the coronavirus and other outbreaks we have seen is the higher death rate from infections. This has impacted global travel and spending, which has direct impacts on commodity demand.

The initial reaction to the coronavirus was felt in equity markets. As people quit traveling, we are seeing less spending, especially in countries where the confirmed cases are the greatest. This is especially true in China where many travel bans and quarantines have been put in place. As a result, we have seen China’s economic indicators drop to record lows in recent weeks.

While the coronavirus is not the first global outbreak of such a disease we have seen, it may end up being the costliest in history, not just for the United States, but for the world. The SARS outbreak lasted from 2002 to 2003 and cost the global economy an estimated $40 billion. The H1N1, or Swine Flu, Outbreak lasted from 2006 to 2011 and cost the global economy $50 billion in revenue. Estimates on economic losses from the coronavirus are between $3 and $3.5 trillion.

The difference between previous disease outbreaks and the coronavirus is the growth we have seen to the Chinese economy over the past twenty years. The Chinese economy is now the sixth largest in the world and has a considerably larger impact on global financial markets.

We have seen several countries offer economic support to help offset these losses, but the actual benefit from these may be limited. The most talked about support has been a reduction to interest rates in many countries. The hopes are these will stimulate spending and prevent financial losses. This is a repeat of what was done when the U.S. banking industry suffered heavy losses. The difference between then and now is a virus outbreak prevents travel and consumer spending, which tend to be less affected by interest rates.

The commodities that may see the most impact from the coronavirus and beef and pork. The United States has been hoping to see elevated meat demand from China following last year’s outbreak of African Swine Fever. This was especially the case with China’s meat supplies dropping ahead of the Lunar New Year. This was right when the coronavirus outbreak took place though, which has caused a considerable drop in the country’s meat demand. Many restaurants closed ahead of the New Year celebration and remain closed.

Concern is building over the current sales pace on soybeans. For the marketing year cumulative soybean sales trail last year by 196 million bushels. This drop has happened even with a return of China buying which currently totals 105 million bushels. The issue is that even with China returning to the import market, the U.S. has lost business from other buyers. Another concern is that the U.S. has only sold 69% of yearly expectations with the normal volume for this time of year being 88%.

The United States may start to see more Chinese soybean demand in the near future, however. This comes from China offering year long tariff exemptions for its domestic crushers. While China has offered exemptions before, this one is different. This is mainly from the fact this exemption covers a full year of imports rather than a defined quota such as past years. It may still be several weeks before China is an active soybean buyer from the U.S. though, as Brazil is offering soybeans at a sizable discount even when tariffs are removed.

This commentary is the sole opinion of Karl Setzer, market adviser for AgriVisor. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to contact Karl at ksetzer@agrivisor.com. You can also follow Karl on Twitter via @ksetzergrains.