FARGO, N.D. — North Dakota State University's Frayne Olson said the markets trade fear before fact, which explains why the news of the spread of a new coronavirus in China and throughout the world hit the hog and soybean markets hard.

"So far, my understanding is the actual physical trade flows haven't changed much but on the same side, phase one agreement we haven't really geared up. The Chinese haven't really geared up their buying yet," said Olson, a marketing specialist. "This is just adding one more layer of concern about how rapidly will the Chinese economy recover are they going to have the financial well-being or where-with-all to be able to purchase all the items that they're looking at. "

So far, the coronavirus has eclipsed the number of cases China had during the SARS epidemic, another respiratory disease outbreak. Olson said the market will be sensitive to new developments until the cases start to stabilize or ease.

The other concern is that China will back off its phase one purchase commitments. He said there is act of God out clause in the agreement, but both countries would have to agree on any changes. It may be more likely the Chinese backload their purchases and restocks after the coronavirus subsides.

Ryan Findlay, American Soybean Association CEO, said he doesn't see the U.S. agreeing to let China out of its obligations.

"So while, yes, there may be a clause in there that says while coronavirus is an example of something that they can back away from, I think our government officials are going to say, China, you've made a good faith sign, you've said that you're going to enforce this, and you need to do that," he said.

While the impact is minimal right now, farm groups are concerned about the negative impact if coronavirus continues to spread. SARS didn't peak for 43 days, so there are fears that coronavirus could linger and slow exports of U.S. ag products.

"We're always looking at where are we going to move that product, who is going to consume it and especially when we see that trade is really essentially going to be stopped in some areas, that is very much a concern for us," said South Dakota Soybean Association Executive Director Jerry Schmitz.

"Even though that they're still going to keep eating, are you going to be able to get certain products into those cities and how are they doing it?" said Craig Andersen, South Dakota Pork Producers Council president.

Andersen speculates that China may pick up buying in the second and third quarters.

"We would hope that it would just delay the timeline a little bit," he said.

"I think (the U.S. Department of Agriculture) set that expectation for U.S. soybean farmers, and U.S. agriculture in general," Findlay said. "Expect some of these purchases to happen later in the 2020 year."