Crude Oil To Have Bigger Impact On Long Term Markets Than COVID-19, According To Analyst

The President of Ag Resource Company in Chicago doesn't think the COVID-19 outbreak will have much of an impact on the latest USDA seeding intention numbers.

Dan Basse feels mother nature will play a bigger role.

"But we are seeing farmers who are switching away from corn to possibly soybeans. Maybe a million acres could go from one to the other, but at this late date U.S. farmers are somewhat locked in on their intentions because of revenue insurance. So there may be some changes around the fringe but I don't think they'll be big unless we have another very inclement, wet spring like we had last year - the odds aren't in that favour but that's what it would take to jostle the numbers as we see them today," explained Basse.

The March 31st report indicated corn planted acreage in the United States is up 8 per cent from 2019 to an estimated 97 million acres. Soybean acreage climbed 10 per cent to an estimated 83.5 million acres.

Meantime, Basse says that while the markets indicate some countries buying more amid the COVID-19 outbreak, he feels the drop in crude oil prices will have a bigger impact than the virus will on long term markets.

"We say that because the ethanol and biofuel industries in the United States and across the world are struggling so much as biofuel prices are trading higher than where unleaded gasoline or some of the other petroleum derivatives are. So it's crude oil that really bothers us more than COVID in terms of our long term outlook of the agriculture market."