What trade war did Bloomberg have? Trump sees record farm sales to Hartland China (Bloomberg) – measured by Bushell, US-China relationship has never been stronger. Through trade war and open enmity at the highest political levels, the United States is increasingly dependent on pig farmers and crop farmers in China. Already the largest soybean and corn consumer in the United States, China purchased an unprecedented 11.2 million metric tons of corn this season, an increase of nearly 1,300% compared to pre-trade purchases. For now, both sides seem to be happy. U.S. imports have helped China feed its herd of pigs, which are recovering faster than expected after the outbreak of African swine flu created a shortage of the country’s most important protein. Meanwhile, U.S. farm profits rose to a seven-year high, offset by China’s demand and additional support for agriculture from federal aid. China has purchased nearly 30 million metric tons of U.S. soybeans, accounting for 57% of U.S. export sales this season since 1991. As for maize, which is an alternative to corn, China’s sales account for 80%. Maize purchases, once very low, have risen to almost 30% .But the reliability is low. As the trade war has shown, experts warn that the market will evaporate quickly, and how many geopolitical events – an incident in the South China Sea, for example, or operations in Hong Kong – will end with another chill in Chinese imports. Tom Wilsack, who served as Secretary of Agriculture from 2009 to 2017 and has emerged as a leading candidate for the post under President-elect Joe Biden, said U.S. agriculture should be careful about putting more eggs in the Chinese basket. “I think the lesson to be learned from the last two years is that American agriculture needs to continue to be diversified so products can go anywhere other than storage bins.” For now, the largest purchasers are on par with the “big grain plunder” of the Soviet era, another major agribusiness at a time of tension between the superpowers. Overall, the United States has almost exhausted its export potential. “We are loading the boats as fast as we can,” Greg Dowd, the U.S. trade representative’s chief negotiator for agriculture, told Bloomberg in late October. “95% of what can be done in 2020 is already booked in the north, a large portion of which is soybeans for China.” Farm Belt, which voted overwhelmingly for Donald Trump’s re-election, is waiting to see how Biden approaches trade talks with China. Jim Putnam, who grows corn and soybeans in Minnesota, said Trump’s North American and Chinese trade deals, and covet-linked farm aid, have stabilized the agricultural economy. “I was never a big Trump fan, but he got Chinese attention with the first phase,” he said. “I hope the Biden administration can keep things going.” As relations improve, China’s hunger for U.S. crops reflects a combination of factors: the strength of China’s post-Govt economy, the unintended consequences of swine flu recovery in Africa, and limitations on the country’s own corn production. When the disease killed half the country’s herds after China announced its first outbreak in 2018, traders predicted a five-year deadline to recover. It was so fast. The herd is now 80% of its pre-disease stages. But the industry has changed. Multi-tiered “pig hotels” and large industrial producers grew fat on pig table scraps instead of backyard farms. Pigs eat more corn, soybean meal and other fodder grains if more professional activities. This means increasing demand for corn, ”said Greg Morris, head of AG Services and Oilseeds at Archer-Daniels-Midland Co., at a recent investment conference. Outgoing US President Trump has borrowed from the deal for a two-year trade war and China to increase purchases of agricultural commodities by 52% since 2017. At the end of October, China met 71% of its August-based export target of $ 36.5 billion and planned to import $ 31, according to the USDR. Others are skeptical of the influence of the trade agreement. “China does not adhere to trade policies because they want to, and it only happens when there is a need,” said Don Bass, head of the Chicago – based consulting firm AcroSource. “I think China would have bought the same amount of grain with or without a phase agreement.” China has already purchased so much corn from the United States and Ukraine, traditionally its largest supplier, that for the first time this year imports exceeded the World Trade Organization’s allocation of 7.2 million tonnes. USDA’s foreign agricultural services expect China’s purchases to reach 22 million tonnes this season. These are the predictions that American farmers will make when deciding how to allocate their land for the 2021 growing season. Behind closed doors, U.S. executives worry that they are being disadvantaged. China closely maintains the position of its reserves, and only its state-owned enterprises understand the full extent of the country’s demand. The hurricane in the Northeast could have caused severe damage to the country’s harvest or, as its agriculture minister said, a bumper crop could be seen this year. The amount of corn subject to low charges is also opaque. Les Finemore, chief investment officer at the Commodity Hedge Fund Impo, drew parallel to what became known as the Great Grain Plunder of the 1970s. Hiding the severe domestic crop failure, the Soviets frantically bought millions of tons of American wheat, raised global prices, and the U.S. Contributed greatly to inflation in China, target self-sufficiency. President Xi Jinping visited a corn farm in Jilin in July, urging local authorities to protect the fertile soil in the region. If the country can increase its yield by 2.5% a year, it could meet domestic demand by 2029, said Sue Weeping, chief analyst at the Ministry of Agriculture. The country is redistributing land from non-grain crops to maize. Chemsena also acquired Cinque in 2017 and plans to use genetically modified crops and other technologies to help the country achieve 90% self-sufficiency. Despite the fermenting political relationship, China is building its global supply chain. As part of its belt-and-road initiative, it has invested heavily in Brazil, the world’s largest soybean producer, and in the Black Sea region. With the acquisition of Noble Group’s agricultural arm and Dutch grain trader Nietra PV, it is now jointly renamed Kofco International Limited. Despite the purchase tabs, the scars of the trade war remain. The tariffs are still in place, said Joseph Clapper, a former USDA chief economist who said the Biden administration would eventually face a challenge. The new president will also have to deal with issues such as intellectual property and business practices, which are at the table. As China’s tension with Australia re-clarifies, the sticking points on any issue could stress agricultural trade. Launched in 2018, the snowfall occurred when Canberra banned Huawei Technologies Co to build its 5G network on national security issues; This year, China moved to curb imports of barley, wine, sugar, lobster, coal and copper ore. “This issue has never really been about the agribusiness,” Clapper said. “The big problems were outside of agriculture. I think they were tough.” For additional articles like this, please visit us at bloomberg.com and subscribe now to progress with the most trusted business news source. © 2020 Bloomberg LP
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