Grain markets on Monday recorded sharp declines.
A market analyst outlines the underlying reason.
Money fled most commodity and equity assets as COVID-19, or Wuhan Coronavirus spread into South Korea, Iran and Italy, reports Brugler Marketing and Management.
Greg McBride, commodities broker with Allendale, Inc, says grain markets quickly became defensive, as World Health Organization representatives confirmed Wuhan Coronavirus’ vast spread.
?You have quite a bit of new cases and loss in South Korea, Italy and Iran. The problem is it?s (Coronavirus) becoming more of a global issue than expected. With it being as big as it is in China, that brings other concerns for the world stock markets too,? McBride said.
President Donald Trump remains unsure about Coronavirus’ effect on trading relations with China. However, one Administration feels it will not impact Chinese demand for United States products.
?(Secretary) Steven Mnuchin said he didn?t feel like it was going to impact their demand at all,” McBride said. “We?re not starting this Phase One deal as well as expected, but that?s a mitigating circumstance. It?s not like there?s any malice to it. You just have this massive, global fear driving the markets right now. At some point, we will get over it.?
