Commodity

Coronavirus Outbreak is Continued to Rattle in Global Commodity Markets

The outbreak of Coronavirus in China has continued to slow down the Agri-commodity market from the last few weeks. The lower demand from the Chinese market has made a complex situation in the global market growth.

Rice prices have fallen in downwards trends from the last few weeks. The number of Coronavirus cases rose to approximately more than 1000 cases in China. Due to the imposed travel bans in Wuhan and Huanggang region in China, the rice market is also affected by global export-import businesses.

Chinese Economic contribution to the Global Market

  • China is the World’s second-largest biggest economy. China’s extraordinary economic surge over the past 40 years was driven the market growth globally. Beijing is considered as the largest trader of merchandise around the world.
  • The long practice of business from Chinese companies and the country’s vast growing market has encouraged thousands of foreign businesses to start their own factories; it has provided the opportunity to join local distribution networks and helping traders to open new shops.
  • Among all these, it has a vast supply-chain-system in the global market. For the current situation, the Chinese economy disrupts and disturbs the global economy.

Reasons behind Slow Down Chinese Market Growth

  • Wuhan city council has suspended all the public transportation facility in the city, including city buses, subway, ferry, and coach. It also banned the city airport and railway station. Wuhan is considered one of the major transportation hubs along the Changjiang River. Therefore, the current situation drastically affects the Agri-Commodity market.
  • The outbreak of the virus has also damaged the global oil demand to a greater extent.
  • Significantly less amount of rice usually may well be consumed during the week of New Year’s Festival celebrations in China. This is a period of particularly high demand because normally many Chinese prepared several rice dishes during the holiday week. Therefore, decreasing the supply of rice to the Chinese market has a great effect on the global economy.

Current Market Analysis

According to Beijing’s Official Statistics Agency, China’s economy grew by 6 percent in the last Financial Year. But from the latest data, it shows that it has dropped to the lowest rate for almost 30 years.

The Coronavirus makes an unlikely drop in the global economy such as consumers and businesses around the world.

GDP Growth of China in the First Quarter of 2020

  • It is expected that China’s GDP growth in the first quarter of 2020 could be fallen around 5 percent.
  • The first industrial sector which is reeled from the outbreak in the travel and tourism industry. Not only tourism industry is affected due to the outbreak, but the entire supply-chain management will also be getting affected. Most shipping companies are stopped their operation.
  • China is a huge market for rice products. The rice shipping is really hit the skids in the last week. So the global rice industry is also affected due to the current situation of China.
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