The U.S. Department of Agriculture said last week that exporters sold 1.762 million metric tons of corn, the fourth-biggest spot deal ever for the grain. The agency on July 10 reported a sale of 1.365 million tons to China.

China is poised to meet or surpass import quotas set by the World Trade Organization for 7.2 million tons of corn from any country in a year. The Asian nation agreed to buy $36.5 billion in agricultural commodities this year from the U.S. as part of a trade accord, up from $24 billion in 2017.

China also has been aggressively buying soybeans.

President Trump said last week that while China’s purchases of commodities have been significant, the phase one trade deal with the country means “much less” to him than it did when he made it. He said days earlier that he was not considering a phase two.

DTN lead analyst Todd Hultman says he’s taking China’s current buying spree at face value.

“Understanding that not everything China buys can escape being cancelled later. And that usually depends on how South America’s crops turns out,” he said. “We’re in a bit of a hole. This is the worst export total for corn in seven years, and for soybeans in six years.”

Hultman says it is encouraging that despite ongoing political tensions, China has remained an active buyer of U.S. soybeans. And with Brazilian supplies running out, he suggests China will have to keep coming to the U.S. for at least the next few months.

Sources: Bloomberg, Brownfield Ag News

Lawmakers and business groups have ramped up pressure on the administration to grant tariff relief to companies reeling from the coronavirus pandemic and the economic fallout.

Myron Brilliant, executive vice president for the U.S. Chamber of Commerce, said the relief would provide “welcome breathing room for American businesses and consumers.”

In other trade news, the USMCA will not go into effect on June 1 after officials in the U.S., Mexico and Canada failed to meet a deadline last week. The earliest date that the updated North American trade deal can enter into force is July 1.

Lawmakers and business groups have ramped up pressure on the Trump administration to grant tariff relief to companies reeling from the coronavirus pandemic and the economic fallout.

“There’s never a bad time to embrace good policy, and tariff relief would provide some welcome breathing room for American businesses and consumers,” said Myron Brilliant, executive vice president for the U.S. Chamber of Commerce. “Liquidity has emerged as one of the top challenges for businesses of all sizes, and tariff relief— like the tax relief provided in the CARES Act— would alleviate some of that strain.

In other trade news, the USMCA will not go into effect on June 1 after officials in the U.S., Mexico and Canada failed to meet a deadline earlier this week. The earliest date that the updated North American trade deal can enter into force is July 1.

“That’s the obvious question—and the obvious answer is there’s no way to know what the impact of this is, at this time,” Doud said. Despite the turmoil, implementation of the phase one agreement is on schedule, he said.

“At USDA and USTR, we’re talking to our Chinese counterparts every day, by phone or by email—and so far, everything is going very well,” Doud said. “Obviously, this is not the best of circumstances but, so far, everybody is doing everything they can to implement the agreement.”

Doud says China has not asked for a reprieve from their purchase commitments.

Source: Brownfield Ag News

These are the first steps in a deal signed Jan. 15 in which China agreed it would buy an additional $200 billion in U.S. goods over the next two years. Those increases include an additional $32 billion in agriculture exports and $78 billion from the manufacturing sector.

The elevated imports would surpass the value of China’s 2017 imports, which was $186 billion. The projected new totals would be $263 billion in exports in 2020 and $309 billion in 2021, an increase without precedent in the history of U.S. trade.

The tariff reductions in China began Friday. Also Friday, the U.S. lowered tariffs on roughly $120 billion in Chinese goods.

These first steps of the truce come amid a coronavirus outbreak that began in China in late January and has spread to more than a dozen countries. The outbreak has caused a near-standstill in economic activity in the country, which has led to doubts about Beijing’s ability to follow through on the phase-one trade deal.

Even so, the decision to reduce tariffs indicates that China intends to implement the deal. In a statement accompanying last week’s announcement, the Finance Ministry said the decision was intended to “alleviate economic and trade frictions and expand economic and trade cooperation” between the two countries.

Source: Wall Street Journal

Specifically, Canada needs to ratify the deal. Canadian Prime Minister Justin Trudeau urged legislators last week to quickly approve the new continental trade pact, but the main opposition party said it wanted to study the deal, indicating the ratification process could be slow.

Trudeau lost his legislative majority in the October election.

Ratification in Canada is expected to wrap up by April, but the passage of USMCA does not trigger a timeline for the deal to become enforceable.
All three countries need to meet their obligations, and that’s a heavy lift.

Officials in the U.S., Mexico and Canada must spend the next months working to meet all the necessary obligations outlined in the deal. That includes Mexico making sure it is prepared to protect workers’ union rights and that all three countries have updated their rules that govern how cars qualify for reduced tariffs.

Once the countries have completed all the required preliminary work, leaders will notify each other in an exchange of letters. The deal will enter into force about 60 days after that exchange of letters.

The three countries are aiming for the pact to go into effect this summer, but trade experts say that’s an ambitious timeline.

A former aide to the president has cautioned that the pact may not be in force until 2021.

Sources: Politico, Reuters

“It’s imminent,” he said of the payment, “although you can define that how you want to in Washington, D.C.”

Perdue said this third tranche of a $16 billion aid package announced will be the last farmers should expect, because success on the trade front should restore farmer incomes in 2020.

Perdue spoke at the annual American Farm Bureau Federation convention last week in Austin.

“We know 2019’s been a pretty tough year,” he told producers. “Farm disasters, unfair trade retaliation, low prices—affected every farm in America. But you kept on keeping on and you persevered.

“In agriculture, we like to grow things and we would rather have trade than aid,” he continued, citing a series of recent administration breakthroughs on trade. “So, let’s sell stuff,” he said. “Our farmers are going to demonstrate to the world that we can grow a safe, healthy product the Chinese will love.”

Sources: Farm Progress, Reuters

Arkansas: $330 million
Illinois: nearly $1.1 billion
Indiana: $542 million
Iowa: $1.18 billion
Kentucky: $172 million
Michigan: $194 million
Minnesota: $801 million
Missouri: $472 million
Nebraska: $716 million
Ohio: $389 million
South Dakota: $400 million
Tennessee: $176 million
Wisconsin: $254 million
Source: Brownfield Ag News

The deal contains provisions that could give a leg up to farmers after a particularly tough year. Those include China giving up restrictions on growth hormones for beef and easing an approval process for genetically modified crops. Before the tariff war, the value of U.S agricultural exports to China in 2017 reached almost $20 billion. In 2018, that number dipped to $9.3 billion.

The agreement was announced Friday, two days before the U.S. was scheduled to introduce a new round of 15 percent tariffs that would have targeted $160 billion worth of Chinese imports. Trump did not enact those tariffs. He is also expected to reduce duties on roughly $250 billion worth of Chinese goods, including many consumer items.

The Corn Refiners Association was quick to praise the news, calling it a “welcome sign of progress.”

Source: Politico

Japan’s parliament approved what has been dubbed a “mini” trade pact with the U.S. earlier this month. The agreement puts U.S. ag products, for the most part, on the same footing as exports from the 11 nations participating in the Trans Pacific Partnership.

The U.S. and Japan are committed to further trade talks in early 2020.
The Kyodo news service said that under the trade pact, the tariff on U.S. beef would gradually fall to 9 percent from the current 38.5 percent. Pork, poultry, wheat, cheese, wine, ethanol, and other goods will also see lower tariffs. Japan, the No. 3 market for U.S. farm exports, is forecast to import $12.5 billion worth of them this fiscal year.

Dan Halstrom, president of the U.S. Meat Export Federation, called it “one of the biggest developments in the history of red meat trade.”

Source: Successful Farming