As the concerns and the effects of the coronavirus continue to worsen, I have been getting numerous calls and emails from pecan producers and buyers asking what is going to happen to the price of pecans.
While I would like to put everyone’s minds at ease and help settle fears in the market that I am so closely connected to, the simplest and most honest answer I can give is this, I have no idea.
I would love to tell you all that we are in a temporary crisis that will have very little effect if any on the global pecan market, but that would be simply a guess, and likely a poor one. So let’s look at the facts, and defer to the economists for speculation on the future of markets.
The facts are that North America produces 80% of the world’s pecan supply, and the coronavirus is here in the US and spreading. While symptoms of the virus are mild, the mortality rate is a major concern and has prompted health officials to ask citizens to self quarantine if symptoms are present, and this is where the effects on the economy come into play.
Due to the encouragement of “social distancing”, many sectors of the US and global economy are being affected in a big way. Travel and tourism are expected to be hit the hardest, the International Air Transport Association warns that COVID-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020, and the international film market could lose over $5 billion in lower box office sales, according to the Center for Strategic and International Studies.
On a more positive note, agriculture is expected to be one of the least affected industries due to lack of social interaction for most ag producers. The demand for ag products could be a different story. While the supply of ag products may not be as affected, the demand could be a different story. With many analysts predicting a global recession or rolling recessions around the globe, we could see demand for pecans temporarily fall.
The one thing most economists seem to agree on is that the effects of covid-19 on the economy are largely dependent on the ability of containment in each country. If the virus can be contained in a timely manner most economists agree that because the economy was so strong going into the epidemic, it will likely bounce back relatively fast. However, the longer containment takes, the more significant the economic effects will be.