Farm Bureau economist on China being behind on Phase One commitments

U.S. farm exports are headed to China next month, despite political tensions between the two world powers. Although the purchases are on the ledger, analysts say it will not be enough to meet phase one promises.

An American Farm Bureau Federation analyst shows that China is buying more U.S. commodities for the upcoming market year, starting in September. AFBF economist Veronica Nigh says that the analysis includes corn, soybeans, sorghum and cotton.

“So far, soybeans, sorghum, and cotton have quite a lot of advanced new crop sales, greater than what they’ve been the last few years,” Nigh said. “Corn sales, a little bit slower. Even though we are seeing reports of big sales by volume, when you look at those sales a a share of total production that’s expected this year, those sales are still pretty moderate.”

She also states that large new-crop sales kick start exports for the new marketing year, but does not necessarily lead to greater total exports. Current data shows China is behind on its Phase One commitments.

“Through the end of June, China was behind on their purchases that they would need to make in order to reach that commitment,” she notes. “So unfortunately, it’s going to come down to the wire but we’ll still be looking very closely over these next few months to see how the pace is going.”

There are many factors that can influence trade with China.

“There’s a lot of dynamics going on, those that are market driven and those that are politically drive, and so, one thing we do watch pretty closely are canceled sales. That would be commitments for purchase that never actually materialized into exports, and then, I think it’s also important to remember that we’re only a part of the larger China-U.S. relationship,” Nigh said.

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