China is draining US corn and soybean supplies, helping to make MY 2020-2021 a success for US farmers. This increases the pressure on Joe Biden’s new administration to establish a lasting trade connection between the countries, even as political relations remain strained.
âWe’re encouraged by the numbers we’re seeing, but we haven’t overlooked the long-term stability of the relationship,â said Lesly McNitt, director of public policy and commerce for the National Corn Growers Association. Agri-Pulse. âLong-term certainty and stability is a priority we would like the US and Chinese governments to work towards. “
Chinese buyers recently shopped for corn, pledging to purchase approximately 5.5 million metric tonnes of U.S. corn for delivery in the 2020-21 marketing year. Those purchases included a single US Department of Agriculture export grain sale announcement on Feb.5 for 2.1 million tonnes.
But the situation is complicated, according to Secretary of State Antony Blinken, who has suggested in recent days that the Biden administration can cooperate with the Chinese on some issues while remaining critical of the government.
He says he strongly supports his belief that the Chinese government has committed genocide against the Uyghurs, a religious minority in the country, but also maintains that the United States and China can work together.
White House spokeswoman Jen Psaki said on February 9 that the United States would take a “tiered” approach to how it would deal with China. She also confirmed that there was not yet a draft appeal between President Joe Biden and Chinese President Xi Jinping.
The US-China relationship “is arguably the most important relationship we have in the world going forward,” Blinken said at his first press conference after taking the oath. âIt’s going to shape a lot of the future we all live in, and more and more there are some conflicting aspects of this relationship. It has competitors. And it still has co-ops.
The example he gave of cooperation was the fight against global warming, but it is the future of international trade that interests groups like the US Grains Council, the National Corn Growers Association and the US Soybean Export Council. .
After a depressed trade year in 2019 against the backdrop of tariff hikes set by both the United States and China, 2020 offered renewed optimism thanks to the easing of the trade war reached in February. Neither side has lifted tariffs under the Economic and Trade Agreement between the Government of the United States of America and the Government of the People’s Republic of China, better known as the Accord. phase one, but China agreed to buy $ 80 billion. value of American agricultural products over two years, and the country quickly began exempting American products from tariffs.
Biden said he had no plans to immediately lift U.S. tariffs on China, and Missouri Corn Growers Association CEO Gary Marshall said he hoped the U.S. and China would continue to respect the trade agreement.
âWe hope that the Biden administration will continue the second year of the agreement with China,â he said. Agri-Pulse. âThere is no indication that they will not do it. We think it will be a fantastic year for corn exports, not only to China, but to the whole world.
As to whether the United States and China will lift their tariffs has not been decided, Blinken said on February 8.
âWe’re looking at all of this,â he told MSNBC’s Andrea Mitchell in an interview. âWe have to make sure that every time we act, the first question we ask ourselves is: does it advance the interests of our own people? Does this make them more prosperous? Does this advance their security? Is it extending their values? This is the first question we must ask ourselves. And so, when it comes to something like a tariff, does it hurt us more than it does the country they are being brought against? This is the question we are asking ourselves.
Jim Mulhern, CEO of the National Federation of Dairy Farmers, said dairy farmers are also counting on the Biden administration to complete the “full implementation of the first phase of the US-China trade deal,” but stressed that he would like to see the end of “market-damaging retaliatory tariffs on US dairy exports to China.”
Meanwhile, China has launched a charm offensive. The Global Times, a state-owned media outlet, ran an article about the “message of cooperation in the United States” that Communist Party officials are expressing to the Biden administration. The article, under an illustration of a handshake in front of a background of flags of the two countries, quotes Chinese Vice Foreign Minister Le Yucheng as saying: “Anything is possible when China and the United States choose to cooperate. .
And the massive 2.1 million tonnes of corn purchase China made on Feb.5 may have been a message in itself, said Arlan Suderman, chief raw materials economist for StoneX Group Inc.
âWhy make such a big purchase now rather than buying all the time which would have less influence in the market? ” he said. “These are just a lot of unanswered questions.”
In other words, why not make smaller, more frequent purchases that don’t have the effect of driving up the prices for future business? And the purchases, he said, come at a time when some Communist Party officials are advocating self-sufficiency.
And China has returned to the U.S. ethanol market, buying 8.6 million gallons in November, the biggest purchase the Chinese have made since 2018, according to the Renewable Fuels Association.
China’s failure for much of 2020 to make big purchases of ethanol was seen as a stumbling block to meeting the deal’s first-year “phase one” target, but now , trade appears to be picking up at a record pace.
Archer-Daniels-Midland Company executive vice president and chief financial officer Ray Guy Young said during the company’s fourth quarter earnings call that he believes China is already committed to buying 200 million gallons of corn-based biofuel in 2021.
âI’ve always said it,â McNitt said. âEthanol is a great opportunity and we are coming into the first year of the US-China ‘phase one’ deal and China is still a little behind on its purchasing commitments. Ethanol would be an important means of moving the needle.