Miller Magazine Issue: 122 February 2020

86 MARKET ANALYSIS MILLER / FEBRUARY 2020 Official statistics from China on new confirmed and suspected cases of coronavirus infection suggest that the peak of the epidemic is likely to be left behind. The decline in industrial production in China will affect other Asian countries this month, but most factories and plants in the Middle Kingdom will resume work until early March. The Bank of China is likely to expand incentives, and global central banks will continue to cut rates. JPMorgan plans to include Chinese bonds in its benchmark indices, and on the eve of this event, Beijing is likely to do everything pos- sible to maintain the high liquidity of its financial system. The stability of economic growth and fiscal stimulus in developing countries remains in question, so the market may begin to lay in prices a further reduction in rates by relevant central banks. Low inflation will also contribute to this. Asian developing markets are likely to recover soon after the collapse, but US assets are likely to look more attractive. Ongoing concerns about the growing amount of deat- hs and new cases related to the coronavirus are having an impact on agriculture and commerce. As China shuts down the mobility of 60 million citizens, closes businesses and production, and blocks transportation within mainland China in an effort to stop the spread of the deadly virus, imported products are getting backed up at the country’s ports. Some cities are still closed, even DHL can’t deliver documents in banks. Even if you get a shipment to the mainland Chinese ports, there will have to be sufficient truck capacity (for front haul and backhaul) hauling to and from the ports to regional distribution points. Talking about grains we bear in mind that global prices often depend on US-China tension. If you think that the 15th of January – phase 1 signing day – means something – you are wrong. Under the new U.S.-China trade deal, the Asian country is expected to purchase $200 billion in U.S. products over each of the next two years. That total includes an increase of between $40 billion and $50 billion in ag products in each of the next two years. The U.S. ag industry has been eyeing the February 15 trade deadline