The demand for U.S. agricultural products is booming. But the future may hinge on a fragile deal.
Corn’s popping as exports to China surge in the post-pandemic boom. The U.S. Department of Agriculture (USDA) reported May 18th that 1.36 million tonnes of U.S. corn had been sold to China for delivery in 2021-22 [the marketing year starts on Sept. 1st]. The new deal brings the sale total to 3 million tons of corn sold to China in just over a week. The Chinese sales also boosted the price of corn to $6.52 ½ per bushel, according to CBOT (Chicago Board of Trade). In brief, it was a nice week for corn in what is shaping up as a nice year. The USDA are now estimating that exports for the 2020-2021 market year will hit a record 2.7 billion bushels, up from export forecast of 2.15 billion bushels made in May of 2020.
Of course, the surge in corn exports is really just part of a wider demand globally for agricultural products as the reboot from the COVID-19 pandemic takes root. For example, soybean exports also increased beyond earlier expectations. For the 2021-2022 marketing year soybean exports are at 2.28 billion bushels, up from the estimated exports of 2 billion bushels forecast back in May 2020. Once again the main reason for the export upturn is China.
Rosy USDA Export Forecast
The USDA’s agricultural export forecast is rosy for the post-pandemic surge. Ag exports for Fiscal Year (FY) 2021 are projected at $157 billion, up $5 billion from the November 2020 forecast. The USDA forecasting soybean exports at $1.1 billion higher than in the November forecast to a record $27.4 billion. Not unexpectedly, this uptick is due to strong demand in the PRC (People’s Republic of China) and an accompanying boost in prices. Soybean meal exports are projected up $700 million, while total oilseed and product exports are forecast at a record $38.3 billion, a $2.0-billion increase from the previous projection. Overall grain and feed exports are forecast at $37.8 billion, $2.2 billion higher than the November forecast. Cotton exports are forecast up $600 million on higher unit values and volume. Livestock, dairy, and poultry exports are forecast up $300 million to $32.6 billion, as increases in beef and poultry product export forecasts more than offset declines in dairy products. Horticultural product exports are projected to remain unchanged at $34.5 billion.
Exports for China are raised $4.5 billion from the November forecast to a record $31.5 billion due to strong first quarter shipments and surging sales, most notably the aforementioned corn. China is forecast to remain the largest U.S. agricultural market in FY 2021, followed by Canada and Mexico.
Opening the tap for ag-commodities to China
China opened up the tap to U.S. agricultural goods with the signing of the Phase 1 trade agreement with the previous Trump Administration. Under Phase 1 of the agreement, China was to…
View the full article free in the AJOT Digital Edition or by Logging in!View Digital Edition