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America’s agricultural belt seems safe from last Chinese-American spat

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(Bloomberg) – High-level talks between Beijing and Washington may have turned into bickering, but U.S. farmers are still selling shipments of corn to Chinese importers.

The US Department of Agriculture last week announced nearly 4 million metric tonnes of corn sales to China. This is in addition to 5 million tonnes sold in January and February, more than five times the amount a year earlier.

It just shows what some farmers have long hoped for: When China has to make big purchases of crops like corn, the country will have little choice but to do business with the United States.

As long as the United States is the most competitive source, trade with China will be free from the noise of politics, Ken Morrison, an independent commodities trader based in St. Louis, said by email.

The market could have new indications on the direction of trade relations after the discussion of the United States Secretary of Agriculture, Tom Vilsacks, with his Chinese counterpart on Monday evening.

TikTok, Hong Kong, and other US-China flashpoints: QuickTake

During Donald Trump’s trade war with China, the Asian superpowers’ appetite for American crops slowed as the world’s largest buyer of corn and soybeans turned to Brazil to meet demand. But it also matched a time when Chinese pigs were ravaged by the deadly African swine fever, reducing the need for feed for livestock.

Now that the pig herd is being rebuilt, demand is on the rise again. Additionally, it comes at a time when South American farmers have suffered from adverse weather conditions and China has run out of corn stocks.

As a result, China, the world’s largest pork producer, has bought a record amount of corn this season, and soybean purchases are at the highest level in USDA data dating back to 1991. This has sent futures contracts. for commodities to several. peaks of the year.

New study

A new analysis from Iowa State University shows that Asian countries reported that pig losses last year were greater than the official figures shown. Scott Irwin, an agricultural economist at the University of Illinois, said the report’s findings are expected to translate into strong demand for corn and soybean meal as the herd recovers for good in 2022. .

The story continues

When it comes to the U.S.-China trade relationship, there is speculation that the most recent wave of corn purchases could bode well for upcoming negotiations.

It is interesting that the buying took place the week of the meeting, said John Baize, an independent agricultural trade analyst based outside Washington. China wanted to send a positive signal, he said.

They are very good at timing things.

Baize, who also advises the US Soybean Export Council, said he believed the sales of corn to China, reported by the USDA last week, represented new demand, rather than reservations that had been made previously and that had just passed to American sellers.

Yet in 2020, China broke its promise to buy $ 36.5 billion worth of U.S. agricultural products in the first year of the phase one trade deal. Baize and others have said they expect strong demand to continue, which will benefit grain markets even if the country does not yet fully meet its commitment, which for 2021 is around $ 43.5 billion.

At the end of the day, China has to buy a lot of grain, said Dan Cekander, a fourth-generation corn and soybean farmer in central Illinois. It would take something tough enough to prevent China from buying American agricultural products.

(Add Vilsack meeting in fifth paragraph, Iowa State study in ninth)

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