U.S. sales of ag products to China are on pace to set a new record for the past 12 months.
This, despite a slow export pace the first half of 2020 due in part to the coronavirus pandemic and the ongoing trade war between the two countries.
Wendong Zhang, an assistant professor/economist at Iowa State University who grew up in a rural county in northeast China, currently estimates yearly sales of U.S. ag products to China could total $31.15 billion.
“If realized, this would be the highest ever,” Zhang said during Purdue University’s annual Top Farmer Conference held virtually. “We’ve seen tremendous growth of advanced sales of soybeans and a record amount of feed grains, like corn.”
The U.S. sales estimates to China include about $11 billion worth of soybeans, more than $2 billion for pork and $1.5 billion for corn.
And the strong pace could continue this year despite somewhat frosty relations between the two nations.
“We’re in almost a paradigm shift,” Zhang said. “During the last (financial) crisis in 2008, the U.S. and China worked together. But, during the current pandemic, we haven’t seen much cooperation and we’ve seen deteriorating relations.
“Regardless, we could be looking at really strong ag purchases (moving forward),” he noted. “The ag trade issue, which was a major sore point in 2018, is now one of the stable sources (amid the phase one trade agreement).”
The recent explosion of U.S. ag sales doesn’t necessarily represent a major breakthrough in relations with China, but rather a reflection of demand.
China made tremendous progress rebuilding the loss of an estimated 40% to 50% of its hog herd to African swine fever (ASF) since 2018 and reached about 91% of the herd size in December it maintained prior to the ASF outbreak.
“There’s a lot of growth from expanding need for feed grains,” Zhang said. “And despite a major effort (to repopulate the herd), Chinese hog numbers are still down about 10%. So, there’s a much greater need for proteins from other countries.”
China considers pork a strategic commodity, and prior to ASF produced 97% of pork consumed there, which represents downside risk for future U.S. pork exports to China.
But Chinese farmers can’t produce enough grain and oilseeds to feed both the human and livestock populations. China has about 20% of the world’s population, but just 7% to 9% of the arable land available, while the U.S. has less than 4% of the world’s population but 15% of the arable land, Zhang noted.
“We’re making greater progress with protein sales to China as well as consumer products,” he said. “We’re seeing a much more balanced portfolio. It’s not just soybean exports to China,” anymore.
However, U.S. sales of manufactured and energy products to China contracted significantly due to the pandemic and likely will not reach targets of the trade deal this year.
Looking ahead, Zhang doesn’t foresee an immediate rollback of Chinese tariffs under the Biden administration as it deals with the pandemic, but believes there’s a chance the U.S. eventually could rejoin the Trans-Pacific Partnership.