A recent report from the USDA’s Foreign Agricultural Service called “China: Evolving Demand in the World’s Largest Agricultural Import Market,” said from January through July, US agricultural exports to China still were 16%, or $1.3 billion below the same period in 2017, largely because of lagging soybean shipments.
The report was published by the Illinois Farm Policy News, which said a major reason for the lag was laid at the feet of stiff competition from Brazilian exporters.
BRAZIL GAINS TRACTION
“As part of the Phase One Agreement, China has committed to purchase $12.5 billion more agricultural and related products from the US over 2017 levels,” the report said. “After a slow start in the first quarter, US agricultural exports to China increased pace in April through July, with shipments exceeding seasonal trend.” However, this did not make up for slow purchases earlier in the year.
The report added that, “Year-to-date US consumer-oriented product exports to China have more than doubled from 2017 levels, led by record pork shipments. China’s pork and pork product imports have more than tripled so far this year as ASF [African Swine Fever] continues to put upward pressure on prices.
“While both the EU and the United States have captured some of the growth in China’s pork market, Brazil managed to expand its market share from 3% in 2017 to 10% currently.”
The report also noted that, “The trade data suggest that the biggest challenge facing US agricultural trade with China thus far in 2020 is strong competition, especially from Brazil. It stands to note that, indirectly, the pandemic has led to a more favorable exchange rate for the Brazilian real, boosting the country’s competitiveness and helping it to ship record amounts of soybeans to China in the first half of the year.”
NEW MARKETING YEAR LOOKS BETTER
The Illinois Farm Policy story quoted Reuters columnist Karen Braun saying that, “The new US corn and soybean marketing year is just a month old, and the progress toward meeting big annual export targets is more advanced than normal in terms of sales, largely due to strong Chinese demand.
“US corn and soybean export bookings stand at record levels for this early stage, and that bodes well for the expectation that 2020-21 shipments will rebound sharply from the dismal year-ago levels,” Braun said.
Braun pointed out that, “China accounted for 54% of all 2020-21 US soybean commitments as of late September. That is above the 2015-2017 average by the same time of 44% but below the 2012-2014 average of 62%.”
Meanwhile, Reuters writer Christopher Walljasper reported late last week that, “China may fall short of annual agricultural product purchasing commitments made in its Phase 1 trade deal with the United States due to ‘non-agricultural trade issues,’ US Department of Agriculture Secretary Sonny Perdue said Friday.”
Yet China’s food prices are rising, the USDA said.
CATTLE, BEEF RECAP
Fed cattle trading last week was seen at $107 per cwt on a live basis, up $2 to $3 from the previous week. Dressed-basis trading was reported at $167 to $168 per cwt, up $3 to $4.
The USDA choice cutout Monday was down $1.90 per cwt at $216.98, while select was up $0.40 at $208.01. The choice/select spread narrowed to $8.97 from $11.27 with 90 loads of fabricated product and 42 loads of trimmings and grinds sold into the spot market.
There were nine steer deliveries tendered against the Oct live cattle futures contract Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $142.74 per cwt, down $0.22. This compares with Monday’s Oct contract settlement of $140.05 per cwt, up $0.15.