China’s buying — and U.S. farms cashing in
Asian nation’s appetite for U.S. meat and crops may keep prices strong through next harvest.
Jacqui Fatka, FarmFutures
Oct 05, 2021
China is not always well-liked, but it has given the U.S. farmer insatiable demand that has lifted prices — and could continue to do so through the fall of 2022.
In the last nine months, the United States set a record for U.S. agricultural exports to China. The two-year Phase 1 trade deal negotiated under the Trump administration will expire by year-end. It includes a lofty goal: $40 billion in ag purchases per year. China’s ag imports are roughly $150 billion per year from all over the world.
Through June, China’s purchases of U.S. ag products were on pace to hit $33.7 billion for this year. Seasonal soybean purchases, usually happening October through December, historically account for over half of annual soybean purchases.
“The fact we can [possibly reach] $40 billion is not a pipe dream at all,” say Gregg Doud, former U.S. agricultural trade negotiator in the Trump White House.
But what could happen to trade on Jan. 1? The U.S. will still have $360 billion worth of tariffs on imports from China, but all the structural changes negotiated in the Phase 1 agreement will stand. Even so, it’s likely China will try to create leverage in an attempt to eliminate those $360 billion in tariffs.
“Things are good now, and they can continue to be good, but there will be uncertainty and friction with all of this,” says Doud, who now serves as the chief economist at Aimpoint Research.
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