Covid cases in China spiked over the weekend reaching the highest level in over two months with 2,679 cases reported on Sunday. The sharp rise in cases is already impacting logistics including the flow of grains and fertilizer and consumer demand.
Guangdong reported 767 new cases on Sunday, up from just 126 on Thursday, raising the risk of a broader city-wide lockdown which could disrupt logistics in the major port region.
The Xinjiang region, which suspended bus and rail service on October 5th due to cases saw its daily cases spike to 388, near the highest level of the current outbreak.
Heilongjiang, one of China’s largest corn and soybean-producing provinces, saw daily cases rise to 185 on Sunday, up from just 10 on October 26th.
This sharp rise in cases in major port and grain-producing regions is increasing the risks of logistics disruptions which could affect the flow of agricultural products. Historically, these types of restrictions have added costs and difficulties to logistics and pushed up prices.
The disruptions to trucking have already been noticed by the Ministry of Transportation which on Monday said some areas still had “excessive control measures” affecting the flow of vehicles and that they “should go all out to ensure smooth transportation and logistics”.
Salt Lake Co, a fertilizer company, also told investors that Covid-related restrictions were impacting its ability to ship fertilizer which had a negative impact on its earnings in the third quarter.
The sharp rise in cases also continues to weigh on consumer confidence and demand.
On Monday, Shanghai Disneyland announced it was closed until further notice due to a potential Covid case. All guests were required to stay in the park for mass testing and were unable to leave until the test results came back. Shanghai reported a single Covid case outside of quarantine on Sunday.
CITIC Securities, a domestic brokerage, also published a research note stating that the ongoing Covid restrictions have continued to weigh on food demand, including dairy, meat, and baking products.
The brokerage noted that consumer demand for these products did not significantly improve in the third quarter and that the recent rise in cases has meant that for the fourth quarter “uncertainty about demand improvement has increased”.