DENVER, COLORADO, US — The coronavirus (COVID-19) pandemic has brought the US economy to a screeching halt, ushering in a recession in the process. According to a new Quarterly report from CoBank’s Knowledge Exchange, COVID-19 also has underscored the critically important nature of agriculture and other industries essential to rural America.
“This quarter will largely define the next year in terms of the economy and how severe the damage caused by the coronavirus will be,” said Dan Kowalski, vice president, Knowledge Exchange, CoBank. “Nearly everyone will be impacted to varying degrees and the pace of the recovery will be uneven. But the economy had been on good footing and it’s entirely possible that we can get back to reasonable strength within a few quarters.”
The US grain sector remains stuck in a rut, with pressure on commodity prices, weakening basis for corn and soybeans in some markets, and export volatility likely over the next two to three months, the report said. Since 2020 began, corn prices have declined by 12% and soybean prices have dropped by 7%.
While crop farming fundamentals remain challenging, ag retailers enter the 2020 growing season on relatively stable footing, according to CoBank. CoBank said retailers are optimistic for a full agronomy season given pent-up demand for fertilizer and crop protection products following last year’s complicated and wet fall application season.
The report noted that the US ethanol complex is navigating through an extremely difficult operating environment exacerbated by the recent collapse in crude oil and gasoline prices and a virtual overnight evaporation of demand. Several large players have restructured or exited the business, with more expected to do so over the next three months.
The report noted that US specialty crop growers are fearing an even tighter labor situation unfolding this spring as processing of new H-2A visa applications in Mexico is impaired by COVID-19 complications. CoBank said specialty crops growers have benefited from the surge in produce sales at grocery stores but saw reduced exports due to logistical issues related to COVID-19.
The full quarterly report is available on cobank.com.
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