It’s Complicated: Biden’s Plan to Sell More U.S. Farm Products to China – Agweek

0

China is emptying U.S. corn and soybean stocks, helping to make the 2020-21 marketing year a success for U.S. farmers. This is increasing the pressure on the new Biden administration to establish a lasting commercial connection between the countries, even if the political relationship remains strained.

“We’re encouraged by the numbers we’re seeing, but we haven’t overlooked the long-term stability of the relationship,” said Lesly McNitt, director of public policy and trade for the National Corn Growers Association. Agri-Impulse. “Certainty and long-term stability is a priority that we would like to see the U.S. and Chinese governments working toward.”

Chinese buyers recently embarked on corn buying, pledging to purchase about 5.5 million metric tons of US corn for delivery in the 2020-21 marketing year. These purchases included a single USDA grain export sale announcement on Friday February 5 for 2.1 million tonnes.

But the situation is complicated, according to Secretary of State Antony Blinken, who has hinted in recent days that the Biden administration can cooperate with the Chinese on certain things while remaining critical of the government.

He says he strongly supports his belief that the Chinese government 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 Feb. 2 that the United States would take a “tiered” approach to how it deals with China. She also confirmed that there were no plans yet for a call 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 being sworn in. “It’s going to shape a lot of the future that we all live in, and increasingly, there are conflicting aspects to this relationship. There are some competitive ones. And there are still some cooperative ones as well.

The example he gave of cooperation was the fight against global warming, but it is the future of international trade that concerns groups like the US Grains Council, the National Corn Growers Association and the US Soybean Export Council. .

After a depressed trade year in 2019 amid rising tariffs set by the United States and China, 2020 offered renewed optimism thanks to the easing of the trade war reached in February. Neither side has lifted its 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 Agreement of ” phase one,” but China agreed to buy $80 billion worth of American agricultural products over two years, and the country soon began exempting American products from tariffs.

Biden has said he has no plans to immediately lift U.S. tariffs on China, and Missouri Corn Growers Association CEO Gary Marshall said he hopes the U.S. and China will continue to abide by the trade agreement.

“We hope the Biden administration will continue year two of the China deal,” he told Agri-Pulse. “There is no indication that they won’t. We think it will be a fantastic year for corn exports, not only to China, but all over the world. »

Whether the United States and China will lift their tariffs has not been decided, Blinken said.

“We’re looking at all of that,” he told MSNBC’s Andrea Mitchell in an interview. “We have to make sure that whenever we act, the first question we ask ourselves is: does it serve the interests of our own people? Does it make them more prosperous? Does it improve their security? Does this extend their values? This is the first question we must ask ourselves. And so, when it comes to something like a tariff, does that hurt us more than the country they’re wielding against? This is the question we ask ourselves. »

Jim Mulhern, CEO of the National Federation of Dairy Producers, said dairy farmers also count on the Biden administration to complete the “full implementation of phase one of the U.S.-China trade deal,” but stressed that he would like to see an end to “market-damaging retaliatory tariffs on US dairy exports to China.”

Meanwhile, China has launched a charm offensive. The state-run Global Times published an article about the “message of cooperation in the United States” that Communist Party officials are expressing to the Biden administration. The article, below an illustration of a handshake in front of the two countries’ flags, quotes Chinese Vice Foreign Minister Le Yucheng as saying, “Anything is possible when China and the United States choose to cooperate “.

And China’s massive purchase of 2.1 million tonnes of corn may have been a message in itself, said Arlan Suderman, chief commodities economist for StoneX Group Inc.

“Why make such a large purchase right now rather than buying all the time which would have less influence on the market?” he said. “It’s just a lot of questions that go unanswered.”

In other words, why not make small, more frequent purchases that don’t drive up prices for future business? And the purchases, he pointed out, come at a time when some Communist Party officials are advocating self-sufficiency.

And China reentered the U.S. ethanol market, buying 8.6 million gallons in November — the biggest purchase by the Chinese since 2018, according to the Renewable Fuels Association.

China’s failure for much of 2020 to make large purchases of ethanol was seen as a stumbling block to meeting the first-year target of the “phase one” deal, but now , this 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 on the company’s fourth-quarter earnings call that he believes China has already committed to purchase 200 million gallons of corn-based biofuel in 2021.

“I’ve been saying that from the start,” McNitt said. “Ethanol is a big opportunity and we’re approaching the first year of the US-China ‘phase one’ deal and China is still a bit behind on its purchase commitments. ethanol would be an important way to move the needle.

Share.

Comments are closed.