Sales around Reporter Country have continued to be extremely strong. Some of these sales have been a touch lower than they were last spring, but on the other hand, many sales have been stronger than they were a year ago. Whether they are a little higher or a little lower, one thing is for sure, there is strong demand for bulls and commercial females.
As one would expect, the coronavirus is a popular topic of conversation at the sales I’ve attended – a close second to calf and yearling price predictions for the upcoming marketing season. I know many people are struggling with how the coronavirus can have such a negative effect on our cattle markets here in the United States. China is the second largest economy in the world, right behind the U.S. Happenings in China and their impact on the Chinese economy can certainly have a ripple effect on the rest of the world.
Since China only accounts for about 1 percent of the beef we export, it can be baffling that the virus is hindering our cattle markets. I agree that it should not have quite the impact on us that it has, but we all know how the markets work. Traders only make money when the markets are moving. It sounds like this was a good “excuse” to move the markets lower.
With that said, here is just one example of what coronavirus is doing in Japan. Japan is the world’s third largest economy behind the U.S. and China. Japan experienced a pretty dismal final quarter in 2019. Now with coronavirus hurting its tourism and production, Japan is facing the risk of recession. The biggest reason for the financial drop in the final quarter last year was a rise in the national sales tax from 8 to 10 percent, causing a sharp drop in private consumption.
When coronavirus hit, Japan experienced a hurdle in receiving China-made parts for some of their car factories. China also accounted for 37 percent of the $44 billion tourist economy in Japan last year, according to a Wall Street Journal article by Gegumi Fujikawa. An excerpt from the article follows.
“The International Civil Aviation Organization estimates that Japan could lose $1.29 billion in tourism revenue in the first quarter because of fewer Chinese air travelers,” Fujikawa wrote. “In central Japan’s Shizuoka prefecture, home to hot-spring resorts and a portion of Mount Fuji, more than 90,000 tourists, mainly Chinese, canceled their hotel reservations through March, according to the Shizuoka Prefectural Tourism Association.
“Another negative note for the tourism industry comes from the virus outbreak on the Diamond Princess cruise ship, which is docked in Yokohama and quarantined until at least Wednesday. As of Sunday, 355 passengers and crew on the ship tested positive for the virus, according to Japan’s Health Ministry.
“‘The two key points are when flights in and out of China will resume and whether or not global tourists are feeling anxious about coming to Japan after the virus spread on the cruise ship,’ Katsuhiro Hashimoto, an official at the Shizuoka association, said.”
Like I said, we are not going to know the full effects the coronavirus will have on the U.S. for quite some time. I have thought all along that this virus has been in China longer than they want to admit – I wish they would have gotten a handle on this earlier. Now North Korea is reporting something like 12,000 cases as well. Does that really mean there are 112,000 or more? One can only speculate.BACK