By Karen Braun
FORT COLLINS, Colo., Nov 4 (Reuters) – Although soybeans are the traditional cornerstone of U.S. agricultural exports to China, corn has proven the most valuable player so far this year as shipments have shattered previous highs.
Soybeans will be the primary focus through the end of the year and the oilseed’s elevated price should boost overall farm trade to China to a new record despite uncertainties about soy volumes.
China is unlikely to meet the agricultural goals of the Phase 1 trade deal even with sky-high prices, though it is uncertain what penalties may ensue based on the apparent lack of direction from the U.S. side.
Through September, exports of U.S. agricultural and related goods to China were valued at $21.2 billion, including $1.9 billion in September, according to U.S. Census Data published Thursday. That nine-month total is easily the best for the period, above 2012’s high of $17.8 billion.
The full 2020 total had reached $28.75 billion, missing 2013’s record of $29.1 billion. That is despite 2020 tonnage of bulk commodities, including soybeans and corn, rising nearly 50% above the 2013 levels.
The Phase 1 trade deal, inked in January 2020, implied China would purchase and import about $80 billion worth of U.S. farm goods between 2020 and 2021. The 2021 total was targeted around $43.5 billion.
The agreement was seemingly written without consideration that commodity prices could drastically fluctuate as occurred in 2021. The price jump will work in China’s favor, though, even with lighter upcoming export volumes versus late 2020 levels.
Through September, U.S. corn exports to China reached 16.9 million tonnes, valued at $4.6 billion. Soybean exports totaled $4.3 billion, and the January-September volume of 8.8 million tonnes was down 22% on the year.
September U.S. corn and soybean export costs hit nine-year highs for the month, up around 60% and 50% from September 2020, respectively. However, prices had come down from the stronger mid-year levels.
SOYBEAN ANCHOR
October U.S. soybean shipments to China were probably not a record by volume, but their value may have surpassed the all-time monthly record of $3.56 billion set in October 2020.
That would allow November and December volumes to fall a bit below average and still single-handedly lift the year’s total farm exports to a new record, assuming current price levels hold.
Adding in other products should secure the record, though similar to soybeans, sales of other commodities are not as high as last year. Outstanding corn sales as of a week ago were above year-ago levels, but the shipment pace has slowed in the last couple months.
Even with record U.S. agricultural exports to China in 2021, the two-year total should fall short of the $80 billion target, and it is unclear what actions U.S. officials might take, if any.
President Joe Biden has been quiet on trade issues with China since taking office in January, though onlookers expected U.S. Trade Representative Katherine Tai would clarify the administration’s strategy early last month.
The result was highly underwhelming for many economists as Tai’s plan lacked specifics on negotiation and timing. Continuing the communication with Beijing appeared to be her only tangible next step.
The original trade agreement suggests the trajectory of China’s purchases of U.S. commodities, services and manufactured goods would generally increase between 2022 and 2025, though no specific amount is stated.
However, China’s less aggressive U.S. agriculture purchasing as of late supports the idea that domestic needs will be the primary driver of trade, not the Phase 1 agreement.
(Editing by Sam Holmes)
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