China’s imports of U.S. agricultural commodities are rising steadily, but the pace is still well below where it needs to be for the Chinese to meet its first-year commitments under the “phase one” trade pact that went into force in February, according to data analyzed by Agri-Pulse.
China imported $9.76 billion worth of U.S. farm goods from January through August, according to the latest trade data. That’s more than $2 billion worth of trade in August, bringing the total up from $7.719 billion in the first seven months of the year.
But for China to be on track to meet its “phase one” commitment, the Chinese would have had to purchase $15.501 billion worth of ag goods through August, American Farm Bureau Federation Chief Economist John Newton says. That puts the country 37% below where it would need to be. It also means that if China were to reach the goal it would need to import a whopping $5.3 billion worth of U.S. ag commodities every month from September through December.
“They’re a good $20 - $21 billion short,” Newton told Agri-Pulse.
China pledged under “phase one” to buy $36.5 billion worth of ag commodities, but Newton puts that total at $31.025 billion after subtracting freight and insurance.
One of the reasons that the numbers for January through August are so low is that China was buying an extraordinary amount of soybeans from Brazil in the first half of the year. The latest USDA data show physical U.S. soybean exports to China for the first eight months of the year were only $2.4 billion; that’s down roughly 48% from January-August of 2019.
While U.S. soybean exports to China lagged in the first half of 2020, China has been drastically increasing its purchases, much of which have been booked, but not shipped.
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John Newton, AFBF
As of Sept. 24, the U.S. had 17.4 million metric tons of outstanding soybean sales to China. It represents a record pace of export sales and is especially large when compared to the same time last year when outstanding sales to China totaled just 2.9 million tons.
Even though it appears that China will not reach its import commitments for the first year of the “phase one” pact by Dec. 31, U.S. Soybean Export Council CEO Jim Sutter told Agri-Pulse he is confident China will be able to make up the difference and fill all of its promises on buying U.S. ag commodities over the two-year span of the agreement.
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