Minding Ag's Business

Will China Make It?

Katie Micik Dehlinger
By  Katie Micik Dehlinger , Farm Business Editor
Soybeans will likely make up a large share of what China will purchase from the United States to fulfill phase one of their trade deal. (DTN graphic)

In mid-June, national news outlets reported that Chinese officials instructed state-owned grain companies to ramp up agricultural purchases from the United States in a bid to fulfill their $36.5-billion commitment under phase one of a trade deal.

Seth Meyer, associate director of the University of Missouri's Food and Agricultural Policy Research Institute, said sales to China shifted counter-seasonally higher in early summer, a potential indicator of their intentions. With the traditional postharvest purchasing peak still to come, "we're putting more and more pressure on that last quarter to do gangbusters sales and shipments to meet the phase-one agreement with China," he said.

With levels of reported sales and inspections far off the pace needed to meet that lofty goal, China will be hard-pressed to make up ground, especially in the wake of COVID-19 disruptions in the supply chain.

What's on the shopping list? Soybeans will likely make up a large share of purchases, perhaps 60% or so, Meyer said. China could make more corn purchases if damage from the fall armyworm in its northeastern provinces puts a dent in supply. But, Meyer cautioned, any upside could be limited by China's tariff rate quota. Sorghum is likely to be the more popular corn equivalent with distiller dried grains mostly priced out of the equation. Pork, ethanol and a spate of other commodities could come along for the ride.

It's important to remember China inserted a "commercial considerations" clause into the agreement that gives it an out if it doesn't live up to its promises. So, as harvest approaches, I hope China at least gives it the old college try, but I won't be surprised if Beijing's actions fall short of its words.

Katie Dehlinger can be reached at Katie.dehlinger@dtn.com

Follow her on Twitter @KatieD_DTN


To comment, please Log In or Join our Community .