Coronavirus Cases Increase, But More U.S. Soybean Sales Expected

Wall Street Journal writers Wenxin Fan, Natasha Khan, and Chao Deng reported this week that, “New cases of the coronavirus rose sharply after Chinese authorities changed the criteria for diagnosing the illness, raising questions about how soon the outbreak will peak.

“On Thursday, health officials in Hubei province, the epicenter of the infections, announced the largest one-day jump in cases—14,840 on Wednesday, about nine times the number of new cases a day earlier. Epidemiologists, government officials and investors may now need to recalibrate their projections for the trajectory of a virus that remains little understood.”

Nonetheless, the Journal writers added that, “Such a dramatic surge in cases as announced Thursday is likely a one-off. It reflects the shift in how authorities in Hubei province are classifying patients as having clinically confirmed infections after they are diagnosed by a doctor, such as through an X-ray, rather than just those patients who have positive laboratory identification of the virus. That is not standard practice for diagnosing the presence of a specific virus.

‘This does not represent a significant change in trajectory of the outbreak,’ said Michael Ryan, executive director of the World Health Organization’s Health Emergencies Program. He called the jump in cases ‘an after-fact of reporting.’

The Journal article added that, “The vast majority of Thursday’s newly confirmed cases—13,332—were retroactively reclassified. But the broader classification rules mean the daily rise in the number of new cases could continue to gain because more undiagnosed cases may come to light.”

And earlier this week, Financial Time writers Tom Mitchell, Ryan McMorrow, and Sun Yu reported that, “The epidemic may also prevent China increasing purchases of US goods and commodities by $200bn over the next two years, compared to 2017 levels, as agreed in its recent ‘phase one’ trade deal with the US.” (Although China recently reassured the U.S. that the Phase One commitments will be met).

Also this week, Reuters writer Stephanie Kelly reported that, “China has not informed the United States of any delays or reductions of its planned purchases of U.S. agricultural goods under the Phase 1 trade deal due to the outbreak of coronavirus, U.S. Department of Agriculture Under Secretary of Trade Ted McKinney said on Wednesday.

‘We have not received any formal notification of a delay, which pleases me. We hope it doesn’t come,’ he said on the sidelines of an ethanol conference in Houston.

“White House national security adviser Robert O’Brien said on Tuesday the coronavirus outbreak could reduce Chinese purchases of U.S. agricultural products this year.”

On Thursday, in February’s Oil Crops Outlook report, Mark Ash from USDA’s Economic Research Service stated that, “While China has agreed to buy more agricultural products from the United States, the sales are still conditional on market circumstances. This means that any export gains for soybeans might not be immediately apparent. Moreover, in the next few months, Brazil is set to harvest and export a record volume of competitively priced soybeans. Substantial U.S. sales to China then could be deferred until late in the 2019/20 marketing year. By that time, the disposal of Brazil’s crop and the advance of U.S. new-crop development should start to make U.S. supplies more price-competitive again. So, despite the current lack of outstanding sales, more U.S. soybean shipments might be forthcoming by the end of the summer. Under these circumstances, USDA raises its forecast of 2019/20 soybean exports this month by 50 million bushels to 1.825 billion.”

The ERS Outlook also noted that, “Brazilian soybean exports could surge to new heights this year with a record supply and a weak exchange rate. Valuation of Brazil’s currency with the U.S. dollar has now sunk to at an all-time low (at approximately 4.3 real per dollar). Also, as of November, soybean transportation costs from Brazil have fallen. This development stems from completion of paving for a major highway, which is expediting new-crop shipments by truck and Amazon River barges to the country’s northern ports.”

The ERS Outlook also stated that, “USDA hiked its forecast of China’s 2019/20 soybean imports this month by 3 million tons to 88 million. A primary factor behind the altered outlook is an expectation for higher agricultural trade with the United States. Declining freight rates to China are also more favorable for trade overall.”

Mr. Ash also noted in the Oil Crops Outlook that, “Soybean use in China may see only gradual gains this year. While the 2019/20 soybean crush is forecast up 1 million tons this month to 86 million, this still represents a modest 1-percent increase over the 2018/19 level. The country’s hog herd is in the early stages of a recovery from last year’s massive losses due to African swine fever. At the same time, some areas have recently seen an outbreak of avian influenza, which could affect the demand for poultry feed.