COVID-19 implications for U.S. agricultural markets

COVID-19 containment efforts are interrupting consumption and supply patterns around the world, with agricultural markets, production, and shipment also feeling the effects of the pandemic. Commodity markets have been characterized by significantly higher volatility, mirroring trends in financial markets, and have been driven by investors and traders seeking increased liquidity. Prices for energy and mineral commodities have experienced more dramatic declines than agricultural commodities.¹

The consensus opinion of major financial institutions is increasingly recognizing a growing probability of the U.S. economy slipping into a recession in 2020. The food and agriculture sectors will likely not be as vulnerable as travel, entertainment, restaurants, or retail to lower economic activity and declining demand; however, agricultural commodity markets will be directly affected by reduced trade and increased competition for biofuels from cheap oil. Although the duration and extent of the disruptions are difficult to predict, some virus-induced shocks that will affect a number of key crops are coming into clearer focus. These factors include changes in consumer habits, trade disruptions, availability of immigrant labor, and lower energy prices. The magnitude and timing of changes in these drivers over the coming months will be important determinants of 2020 commodity prices and production costs.

Virus-induced shocks will affect a number of key crops. Factors include changes in consumer habits, trade disruptions, and lower energy prices.
Agricultural commodity markets turn lower but remain resilient. This chart shows that prices for energy and mineral commodities have experienced more dramatic declines than agricultural commodities as confirmed COVID-19 cases have risen in the first quarter of 2020.

Consumer habits

Domestic food consumption is experiencing a short-term surge as people react to quarantines and social distancing by stockpiling food in their homes, which will probably eventually be balanced out by lower future consumption and reduced restaurant meals. In their attempt to build personal inventories of food products, consumers have especially favored storable food over the most highly perishable products. Nuts are a nonperishable protein source, while apples have a longer shelf life than many other fresh fruits and vegetables. Apple sales surged in the second week of March, up 20% year over year.² Fewer food imports may also be reaching the United States, shifting demand to domestically produced products. U.S. food production and distribution continue, as these sectors have been designated critical infrastructure by the U.S. Department of Homeland Security, allowing agriculture and food operations to continue in places where residents are ordered to remain in their homes.³

Trade disruptions

Exports are down due to a lack of shipping containers, with many countries partially or totally closing borders and major West Coast ports experiencing workforce reductions. Fewer shipping containers are available in the United States because of reduced imports from China; factory production in China fell sharply in February when COVID-19 cases were most widespread and severe. Many countries are now slowing the flow of goods and people to contain the virus, and these measures have impeded the flow of agricultural trade. Finally, fewer port workers are able to work due to social distancing requirements and fewer container ships operating.

Immigrant labor

Another potential risk, particularly for the permanent crop sector, is labor disruptions due to border closures as part of containment measures. Agricultural labor became a concern after the United States suspended operations at the embassy and consulates in Mexico. These closures will slow the processing of new visa applications for H-2A and H-2B workers: In 2019, more than 200,000 workers entered the United States from Mexico on H-2A visas for seasonal agricultural employment.⁴ Those that participated in the program last year will likely receive a waiver from the U.S. State Department and typically don’t need to have the in-person interviews that have been canceled for new applicants. For fruit and vegetable production, seasonal workers are critical to timely harvest and other farming activities. A weaker U.S. labor market and higher unemployment may lead to additional domestic workers seeking agricultural jobs, which may help soften the effects of the potential immigrant labor slowdown.

For fruit and vegetable production, seasonal workers are critical to timely harvest and other farming activities.

Energy prices

Changes that could partially offset the effects of lower agricultural prices on farm income are reduced agricultural input costs related to energy, such as fuel, lubricants, electricity, and perhaps fertilizer and certain agricultural chemicals.

Permanent crops

Five key permanent crops produced in the United States are almonds, apples, pistachios, walnuts, and wine grapes.

  • Almonds are highly export oriented, and the United States is the world’s largest producer and exporter, so the lack of export demand and port constraints will likely be a drag on total demand. Over the five marketing years ended August 2019, 67% of U.S. almond production was exported.⁵ One bright spot for almonds is that they serve as a storable protein source. Almond prices were driven modestly lower recently after the Almond Board of California reported total production of 2.5 billion pounds, well above USDA estimates of 2.2 billion pounds.⁶
  • Apples are primarily oriented to domestic demand, with 82% of fresh production consumed domestically over the five marketing years ended July 2019.⁵ However, the 18% exported has been a key growth driver, and the United States has been the world’s fastest-growing apple exporter over the last ten years.⁵
  • Pistachios are highly export focused, and the United States is the world’s largest producer and exporter. During the five marketing years ended August 2019, 62% of U.S. pistachio production was exported.⁵ One bright spot for pistachios is that they serve as a storable protein source.
  • Walnuts are highly export focused, with the United States the second-largest producer and largest exporter. During the five marketing years ended August 2019, 73% of U.S. production was exported.⁵ One bright spot for walnuts is that they serve as a storable protein source.
  • Wine grape production is domestically focused and primarily occurs in California. The wine market was already facing price headwinds for 2020, as flat-to-slowing wine demand combined with large wine grape harvests in 2018 and 2019. California wines compete with imports, which account for about 13% of U.S. wine consumption by volume.⁷ Because the United States is a net wine importer, less trade may boost demand for domestic wine; however, with fewer social gatherings and celebratory events, wine consumption faces overall headwinds.

Row crops

For the row crop sector, effects to farmland investors with leased property investments will be less immediate than effects for directly operated permanent crop properties. In addition, the row crop sector, given its larger size and geographically diverse production base, may be more likely to receive government support than permanent crops; however, market hazards remain. Low oil and other energy price implications for ethanol and corn prices will spill over into other row crops if farmers shift acreage away from corn and into crops such as soybeans, wheat, and cotton. However, given that we’re already in the planting season in southern parts of the United States, dramatic national shifts are unlikely.

  • Corn is a domestically focused crop, with exports making up only 15% of production over the five marketing years ended in 2019.⁵ However, the second-largest domestic use for corn, after livestock feed, is ethanol, accounting for just over a third of total U.S. corn consumption in recent years. The steep drop-off in gasoline consumption stemming from reduced driving due to quarantines threatens to reduce ethanol demand as well.
  • Soybean markets were especially challenged by the trade war with China in 2018 before partially recovering in 2019. Over the five marketing years ended in 2019, 47% of U.S. soybean production was exported.⁵ The slump in Chinese GDP will likely reduce China’s soybean demand as meat consumption growth slows, despite the U.S.-China phase one trade agreement commitments to import more U.S. agricultural products.
  • Wheat is another key export crop, with 45% of U.S. production exported over the five marketing years ended in 2019.⁵ A strong U.S. dollar will be a significant headwind for U.S. wheat exports, as the United States faces heavy competition from the Black Sea region as well as per capita demand declining. However, potential challenges with the wheat harvest in the European Union due to COVID-19 could create opportunities for the United States to increase exports.
  • Cotton is the most export-focused U.S. row crop, with an average of 77% of U.S. production exported over the five marketing years ended in 2019.⁵ Lower oil prices represent a risk to cotton, as plastic prices may decline, making synthetic fabrics less expensive and narrowing cotton’s cost advantage for apparel.

In addition to the four largest row crops discussed above, several domestically focused U.S. row crops are well positioned for demand increases in an economic downtown, including peanuts (peanut butter) and potatoes. In addition, one offsetting factor is that lower livestock feed prices may help margins for livestock operations, stimulating production and helping spur crop demand. The closing of schools across the United States poses threats to the dairy sector, a major feed user.⁸

The majority of U.S. tree nut exports occur in Q1 and Q4. This chart shows that during the last decade, major U.S. tree nut (almond, pistachio, and walnut) exports primarily occurred in first and final quarters of each calendar year.

U.S. crop production and export seasonality may help moderate market disruptions

Agricultural product exports are seasonal due to natural crop cycles. Farm product marketing years usually begin in late August, September, or early October, with export sales tending to follow, peaking during the first and last quarters of the calendar year. During the last decade, major U.S. tree nut (almond, pistachio, and walnut) exports primarily occurred in Q1 and Q4. On average, 63% of annual tree nut exports have been shipped during these two quarters; the quarterly export volumes of soybeans in the same period reveal more pronounced seasonal patterns.⁹ On average, 76% of soybean exports occurred in Q1 and Q4 from 2010 through 2019.⁹ In anticipation of economic activities rebounding in the second half of the year, in addition to expected enforcement of trade deals signed with multiple trading partners, agricultural product exports should recover toward normal levels in the second half of 2020.

U.S. soybean exports are heavily concentrated in Q1 and Q4. This chart shows that during the last decade, soybean exports primarily occurred in first and final quarters of each calendar year.

Looking forward

Food and agriculture are functioning as defensive sectors and will be less vulnerable to consumer spending curtailment. While many independent factors drive income returns for farmland, directly operated permanent crop farms are expected to see the most immediate effect. All else remaining equal, the potential crop price declines are expected to reduce current income for farming operations, and, in 2020, will probably be a dominant factor in the price trajectory for most crops. But we anticipate that the relatively inelastic demand for food products will allow for agricultural commodity markets to recover as the spread of the COVID-19 virus slows and supply chains normalize.






1 S&P GSCI, 2020. 2 National Public Radio, Data from Nielsen, March 20, 2020, U.S. retail dollar sales for weeks ending March 7 and March 14 compared to 2019. 3 U.S. Department of Homeland Security, Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response, March 2020. 4 USDA Economic Research Service, January 2020, 5 USDA Production, Supply and Distribution Online, as of March 2020, 6 Almond Board of California, Almond Industry Position Report, February 29, 2020, 7 Wine Institute, as of March 2020, 8 Coronavirus Hits Already Frail U.S. Farm Economy,” Wall Street Journal, March 21, 2020, USDA Foreign Agricultural Service, Global Agricultural Trade System, as of January 2020,

A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and affect portfolio performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future, could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other preexisting political, social, and economic risks. Any such impact could adversely affect the portfolio’s performance, resulting in losses to your investment


Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. These risks are magnified for investments made in emerging markets. Currency risk is the risk that fluctuations in exchange rates may adversely affect the value of a portfolio’s investments.

The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person. You should consider the suitability of any type of investment for your circumstances and, if necessary, seek professional advice.

This material, intended for the exclusive use by the recipients who are allowable to receive this document under the applicable laws and regulations of the relevant jurisdictions, was produced by, and the opinions expressed are those of, Manulife Investment Management as of the date of this publication and are subject to change based on market and other conditions. The information and/or analysis contained in this material has been compiled or arrived at from sources believed to be reliable, but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness, or completeness and does not accept liability for any loss arising from the use of the information and/or analysis contained. The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline, or other expectations, and is only as current as of the date indicated. The information in this document, including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife Investment Management disclaims any responsibility to update such information.

Neither Manulife Investment Management or its affiliates, nor any of their directors, officers, or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein. All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment, or legal advice. Clients should seek professional advice for their particular situation. Neither Manulife, Manulife Investment Management, nor any of their affiliates or representatives is providing tax, investment, or legal advice. This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer, or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security or adopt any investment strategy, and is no indication of trading intent in any fund or account managed by Manulife Investment Management. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation does not guarantee a profit or protect against a loss in any market. Unless otherwise specified, all data is sourced from Manulife Investment Management. Past performance does not guarantee future results.


Manulife Investment Management

Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than 150 years of financial stewardship to partner with clients across our institutional, retail, and retirement businesses globally. Our specialist approach to money management includes the highly differentiated strategies of our fixed-income, specialized equity, multi-asset solutions, and private markets teams, along with access to specialized, unaffiliated asset managers from around the world through our multimanager model.

These materials have not been reviewed by and are not registered with any securities or other regulatory authority, and may, where appropriate, be distributed by the following Manulife entities in their respective jurisdictions. Additional information about Manulife Investment Management may be found at

Australia: Hancock Natural Resource Group Australasia Pty Limited, Manulife Investment Management (Hong Kong) Limited. Brazil: Hancock Asset Management Brasil Ltda. Canada: Manulife Investment Management Limited, Manulife Investment Management Distributors Inc., Manulife Investment Management (North America) Limited, Manulife Investment Management Private Markets (Canada) Corp. China: Manulife Overseas Investment Fund Management (Shanghai) Limited Company. European Economic Area and United Kingdom: Manulife Investment Management (Europe) Ltd., which is authorized and regulated by the Financial Conduct Authority; Manulife Investment Management (Ireland) Ltd., which is authorized and regulated by the Central Bank of Ireland Hong Kong: Manulife Investment Management (Hong Kong) Limited. Indonesia: PT Manulife Aset Manajemen Indonesia. Japan: Manulife Investment Management (Japan) Limited. Malaysia: Manulife Investment Management (M) Berhad (formerly known as Manulife Asset Management Services Berhad) 200801033087 (834424-U). Philippines: Manulife Asset Management and Trust Corporation. Singapore: Manulife Investment Management (Singapore) Pte. Ltd. (Company Registration No. 200709952G). South Korea: Manulife Investment Management (Hong Kong) Limited. Switzerland: Manulife IM (Switzerland) LLC. Taiwan: Manulife Investment Management (Taiwan) Co. Ltd. United States: John Hancock Investment Management LLC, Manulife Investment Management (US) LLC, Manulife Investment Management Private Markets (US) LLC, and Hancock Natural Resource Group, Inc. Vietnam: Manulife Investment Fund Management (Vietnam) Company Limited.

Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates, under license.


Keith A. Balter

Keith A. Balter, 

Senior Advisor, Strategic Initiatives, Timberland and Agriculture

Manulife Investment Management

Read bio
Oliver S. Williams IV, CFA

Oliver S. Williams IV, CFA, 

Global Head of Agriculture Investments

Manulife Investment Management

Read bio