Tag Archives: China

The resumption of soybean sales to China this week is encouraging to American farmers who have seen the value of their crop plummet amid a trade war with the world’s second-largest economy, but producers see it only as a small step and say they need more federal aid.

Private exporters reported sales of 1.13 million metric tons of soybeans to China on Thursday and another 300,000 metric tons on Friday, the U.S. Department of Agriculture said. The Thursday report was the ninth-largest daily sale since 1977, according to the agency’s Foreign Agriculture Service, and it comes less than two weeks after the Trump administration reached a three-month truce in its trade war with China during which the two sides will try to work out their differences.

Davie Stephens, a Kentucky farmer who serves as president of the American Soybean Association, said the resumption of sales is “positive news” but that “it is vital that this 90-day process result in lifting the current 25 percent tariff that China continues to impose on U.S. soybean imports.”

“Without removal of this tariff, it is improbable that sales of U.S. soybeans to China can be sustained,” he said.

China had suspended U.S. soybean purchases earlier this year but under the truce agreed to buy more U.S. farm products. The country typically buys between 30 million and 35 million metric tons of U.S. beans in a normal year.

News of the U.S. sale might prompt some farmers to sell some of the soybeans they have stored on their farms, in part because South American crops will be hitting the world market within a couple of months, said Huron, South Dakota, farmer Brandon Wipf, who serves on the American Soybean Association board.

“We have a narrow window out of which to operate,” he said. “I think you’ll see some farmers selling, some holding on for a little better prices.”

No beans are moving yet out of North Dakota, which typically sends most of its annual crop to Pacific Northwest ports from which the beans go overseas to southeast Asia.

“It may take some time to get the shuttle trains in place and get ocean-going vessels stationed at the PNW,” said North Dakota Soybean Growers Association Executive Director Nancy Johnson. The sale announced this week is for delivery after the new year, she said, and it did not significantly boost prices.

January soybean futures in early Friday trading on the Chicago Board of Trade gained 40 cents to about $9.06 a bushel. That’s down from almost $15 a bushel four years ago and nearly $10 a bushel 18 months ago.

Soybean farmers are getting the largest share of a federal program created to compensate producers up to $12 billion for trade-related losses, though this year’s payment of 82 cents a bushel doesn’t match a market price drop of about $2 per bushel since May.

The Trump administration has said another 82 cents might be approved next year if a trade deal isn’t reached. Both the American Soybean Association and the National Farmers Union this week pushed for a second payment while the administration works on a long-term trade solution.

The farm sector has already lost far more value to this trade war than the (compensation) payments will provide, and damages due to lost markets will persist long into the future,” Farmers Union President Roger Johnson said. “The administration should be doing everything it can to protect the men and women who feed, fuel and clothe this nation.”

North Dakota U.S. Sen. John Hoeven, chairman of the Senate Agriculture Appropriations Committee, said Friday that he stressed the importance of the second payment to Office of Management and Budget Director Mick Mulvaney.

Not getting a second payment could be a “deal-breaker” for some farmers in terms of their support for the Trump administration, according to Wipf.

“They would see that as a broken promise by the administration,” he said. “We’re of course encouraging the administration not to make the miscalculation that this little bit of detente we have with China has suddenly fixed all the problems we have.”

China is officially buying U.S. soybeans again, which is good news for American agriculture. This week’s purchase amount was one for the record books.

A Farm Journal report says the latest U.S. Soybean Export Sales Report from USDA shows that China bought 1,130,000 metric tons of soybeans. To give that amount some perspective, it’s the ninth-largest one-day purchase in ten years. It’s also the biggest Chinese soybean buy in the four years. It’s also the biggest soybean buy of this year, so far. President Trump told Reuters that, “They’re buying tremendous amounts of soybeans. They’re definitely back in the market.”

Reuters says it seems to affirm the trade truce that the U.S. and China reached on December 1st. We still don’t know if China’s retaliatory tariffs on U.S. soybeans and other farm goods will be dropped as a part of the temporary truce. There’s also no word on whether or not the countries can resolve the longer-term disputes, including forced technology transfers and intellectual property theft within 90 days. That’s when President Trump said additional tariffs will go into effect and the trade war will resume

As of early December, China is reporting more than 80 cases of African swine fever (ASF) in 17 provinces and four municipalities, including Beijing, the capitol. Despite the best efforts by Chinese officials, the disease does not appear to be slowing its geographic spread.

At the recent Midwest Pork Conference held in Indiana, state veterinarian, Brett Marsh offered some insight into China’s current status. “We had hoped, of course, with the steps taken by the Chinese government that they could contain the virus,” he said. “That’s clearly not been the case as we continue to get new cases reported in new provinces.”

As reported by Hoosier Ag Today, Marsh says it’s imperative that producers are looking for things that are out of the ordinary or unusual. He says ASF won’t produce blisters on the snout or at the top of the hoof like some other diseases.

Marsh said, “Producers know their swine. They’re with them every day. They’ll know long before someone like me would know (that something is wrong), and so it’s critical that they’re looking for those unusual events.”

Marsh adds that updating your Premises ID will be critical should an outbreak ever occur here in the U.S. He also says there needs to be a strong relationship between you and your vet, and your vet and the state veterinarian’s office.

Other FADs in China
Aside from the battle with ASF, China is also fighting other foreign animal diseases (FADs) such as an outbreak of foot-and-mouth disease (FMD) in Xinjiang province in the country’s far northwest. The reported case killed 46 pigs and infected 108 of the farm’s 331 pigs. In addition, China still has classical swine fever within its borders despite some improvement with the use of vaccinations. However, no regions have been declared free of the disease.

Status quo for ASF in Europe
Meanwhile in Europe, ASF continues its slow spread primarily via feral pig populations. The virus remains very limited in Belgium, but other nations have wider infections, including Poland, Ukraine, Czech Republic, Moldova, Hungary, Romania, the Baltics, Bulgaria and points east. Of course, Africa remains the origin of the virus where herds remain infected.

While the U.S. and China have reached a deal for China to buy U.S. agricultural goods, the market is waiting for China to drop tariffs before transactions take place.

Reuters reports no substantial purchases can happen with a 25 percent duty still in place on U.S. soybeans, corn, sorghum and wheat, according to buyers and analysts. China over the weekend agreed to a trade war ceasefire, and the White House said China had promised to buy an unspecified but “very substantial” amount of agricultural, energy, industrial and other products, with purchases of farm goods to start “immediately.”

Though, Agriculture Secretary Sonny Perdue says the purchases will likely start next month. China’s foreign ministry said on Monday that the two presidents had instructed their economic teams to work towards removing all tariffs. Until then, Brazil is nearing harvest season of its soybean crop and, being cheaper, could instead supply China’s soybean needs.

WASHINGTON (AP) — The Trump administration is celebrating the 90-day truce it reached in its trade war with China as a significant breakthrough despite scant details, a hazy timetable and widespread skepticism that Beijing will yield to U.S. demands anytime soon.

“This is just an enormous, enormous event,” Larry Kudlow, President Donald Trump’s top economic adviser, said Monday of the cease-fire that Trump and President Xi Jingping reached over the weekend on the sidelines of an international economic summit in Buenos Aires, Argentina. “This one covers so much ground in some detail, we’ve never seen this before.”

Yet many economists raised doubts that very much could be achieved within three months.

“The actual amount of concrete progress made at this meeting appears to have been quite limited,” Alec Phillips and other economists at Goldman Sachs wrote in a research note.

During the talks in Buenos Aires, Trump agreed to delay a scheduled escalation in U.S. tariffs on many Chinese goods, from 10% to 25%, that had been set to take effect Jan. 1. Instead, the two sides are to negotiate over U.S. complaints about China’s trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology. These practices, according to the administration and outside analysts, include stealing intellectual property and forcing companies to turn over technology to gain access to China’s market.

In return for the postponement in the higher U.S. tariffs, China agreed to step up its purchases of U.S. farm, energy and industrial goods, the White House said.

Most economists noted that the two countries remain far apart on the biggest areas of disagreement, which include Beijing’s subsidies for strategic Chinese industries, in addition to forced technology transfers and intellectual property theft.

“Ninety days is very little time to fix these perennial issues,” said Bill Adams, senior economist at PNC.

Complicating the challenge, Trump’s complaints strike at the heart of the Communist Party’s state-led economic model and its plans to elevate China to political and cultural leadership by creating global champions in robotics and other fields.

“It’s impossible for China to cancel its industry policies or major industry and technology development plans,” said economist Cui Fan of the University of International Business and Economics in Beijing.

At the same time, analysts said they were relieved that the Trump-Xi meeting at least pressed the “pause” button on tariff hikes. Besides escalating existing tariffs, Trump had threatened to impose import taxes on the remaining $267 billion of U.S. goods from China. This would have raised prices in the United States on many consumer items, including smartphones, clothes and toys.

Fears of a hotter trade war had sent financial markets tumbling in October and November. But they jumped Monday in response to Saturday’s truce. The Dow Jones industrial average closed up 288 points, a gain of 1.1%.

Megan Greene, chief economist at Manulife, said the market’s recent decline had likely contributed to Trump’s willingness to reach a truce.

“We are no longer in the same buoyant economic or markets environment that we enjoyed earlier this year when threats of tariffs against China were first made,” she said.

In the meantime, the outlines of the agreement remain hazy and in some cases confusing. Trump tweeted late Sunday that China had agreed to “reduce and remove” its 40% tariff on cars imported from the U.S. Treasury Secretary Steven Mnuchin said Monday that there was a “specific agreement” on the auto tariffs.

Yet Kudlow said later that there was no “specific agreement” regarding auto trade, though he added, “We expect those tariffs to go to zero.”

Shares of U.S. and overseas auto companies rose on the announcement, though it’s unclear how much companies like GM or Ford will actually benefit. Nearly all the cars they sell in China are made there.

Details regarding China’s pledge to buy more American products — one that it has made before — remain scant. Mnuchin said Monday morning on CNBC that China had offered to buy up to $1.2 trillion of additional U.S. goods, even while the “details of that still need to be negotiated.”

But Kudlow said the ultimate amount will depend on market prices and the health of China’s economy.

“I would think of that as a broad goal,” he said.

State-run Chinese media has described the agreement very differently from how the Trump administration has. It has made no mention of any changes to its auto tariffs. And it has said nothing about a 90-day deadline for the talks.

Greene said this might simply reflect China’s communications strategy. Or it might illustrate China’s weak commitment to the deal.

China agreed to eliminate the retaliatory tariffs it had placed on U.S. soybeans, according to the White House, which also said Beijing had agreed to buy an unspecified but “very substantial” amount of agricultural and other products. That left some U.S. farmers cautiously hopeful Monday.

“This is the first positive news we’ve seen after months of downturned prices and halted shipments,” said John Heisdorffer, a farmer in Keota, Iowa, who is president of the American Soybean Association. “If this suspension of tariff increases leads to a longer-term agreement, it will be extremely positive for the soy industry.”

Kevin Scott, who farms near Valley Springs, South Dakota, and serves on the American Soybean Association, said the news provides hope for farmers who are storing their crops while awaiting better prices. But he cautioned that “it’s going to take a little more to move more beans.”

Among the skeptics is Scott Gauslow, who grows soybeans and corn near Colfax in eastern North Dakota’s Red River Valley. He noted the lack of specifics in the White House announcement.

“What if China calls tomorrow and says, ‘We changed our mind’?” Gauslow said. “There was nothing in writing, which scares me a little bit.”

China is the top market for North Dakota’s soybeans. The state’s farmers sell about $1.4 billion to China annually, according to the nonprofit North Dakota Trade Office.

Some retailers were also encouraged by the agreement, according to the National Retail Federation. At the same time, the federation noted that the truce prolongs the uncertainty around trading with China.

Jonathan Gold, an executive at the federation, said most retailers had already ordered goods for the first three months of the year, so the 90-day delay in the tariff hikes won’t affect them. Many companies have already switched their purchases from China to another country to avoid the potential 25% tariff.

“The question is, what happens at the end of 90 days?” Gold asked.

The global unfair trade practices that hurt American farmers and ranchers every day aren’t exactly state secrets, despite claims by opponents of agriculture who blindly argue that they don’t really exist or matter.

Every year, the U.S. government publishes a lengthy list of worldwide trade cheating called the National Trade Estimate. And, if anyone out there in the policy world still thinks U.S. agriculture isn’t being cheated, we welcome you to take a look.

But, just in case you don’t have time to read the 504-page report, we pulled a few nuggets to show you just how hard it is out there for American farmers and ranchers. And this doesn’t even include all the subsidies and unfair trade practices in India, Thailand, Brazil, and a whole host of other ag competitors.

China
From the intellectual property theft to massive stockpiles of steel and aluminum, China’s trade relationship with the U.S. is strained in many ways.

When it comes to agriculture, China is our largest export market. But America’s total trade deficit with China is significant at $375.2 billion in 2017. As the USTR notes in its report, China’s inconsistent enforcement of regulations and selective intervention create an unpredictable market.

  • China’s 2015 Food Safety Law has been disastrous for exports of dairy, infant formula, seafood, grains and oilseeds. When the international community opposed it, China agreed to an implementation delay but still moved to require an unnecessary official certification of all food products, even low-risk exports.
  • Beef, to some extent, is back on the table in China after years of an outright ban based on unscientific political whims. But China still doesn’t follow international standards on beef and maintains a ban on compounds that are widely used in the industry.
  • Subsides continue to distort the export market and price for many commodities in China. The government provides subsidies and support for cotton, rice, wheat and corn among others. And, China doesn’t follow the market access it promised when it entered the WTO through its tariff-rate quota system.

Canada
Our northern neighbor may be the largest good export market we have but the total trade imbalance for all U.S. goods is significant coming in last year at a whopping $17.5 billion.

The NAFTA reboot, known as the United States-Mexico-Canada Agreement or USMCA, aims to correct some of the imbalance but a look at the issues in agriculture shows just how significant the problem is for American farmers and ranchers.

  • Canada’s supply management system for diary, chicken, turkey and eggs severely limits the ability of U.S. producers to increase exports and means Canadian consumers pay more for these goods.
  • Dairy alone has been a huge problem for U.S. producers with an unfair pricing scheme called Class 7 that is aimed at decreasing U.S. imports of dairy components and increasing Canadian exports of skim milk powder.
  • U.S. grain producers also face a big challenge in Canada with a system that prevents them from receiving a premium grade for grain and instead only receiving a label for the country of origin, which unfairly tilts the market toward domestic producers.

Mexico
Our southern neighbor remains the second largest export market but, like Canada, the total trade deficit – including ag and non-ag products – is large coming in at $71.1 billion last year.

In agriculture, America fights a never-ending battle against unfair pricing, court orders, labeling and subsidies that restrict our exports. Let’s hope USMCA also does some good in Mexico but for now, the problems persist.

  • The international game of hot potato that Mexico and its court system have played with U.S. potato growers is just one area where unfair regulations have hurt American growers. Mexico, back in 2003, had banned the import of potatoes beyond 16 miles from the border. But after a scientific study in 2011, Mexico relaxed the requirement and opened up to potato imports. And then the Mexican potato industry challenged that move in court in 2014. The Mexican government issued new decrees in 2016 aimed at opening market access but the Mexican potato industry again won court injunctions. The legal challenges are ongoing and the USDA and USTR are still working to open market access for potatoes.
  • Raw milk is another area where Mexico has blocked U.S. producers. American dairies have been unable to ship raw milk to Mexico since 2012 because the Mexican government determined the veterinary import requirements didn’t apply to the product. In 2017, the U.S. continued to hold talks with Mexico on this requirement.
  • Meanwhile, and this move is not noted in the USTR’s report, Mexico gave the European Union a sweet deal on common food names related to cheese that blocked American cheese producers from selling their products in Mexico.

The USTR’s annual report is fascinating look at just how unfair the global market really is when it comes to everything from potatoes to plumbing fixtures. And it shows how truly critical a strong farm policy is to American farmers and ranchers.

The American agriculture sector is the most efficient in the world and produces the highest quality food at the best price. Our farmers and ranchers would love to compete on a level playing field. But at the end of the USTR’s 504-page report, one thing is clear: the playing field is far from level.

The Chinese agriculture ministry is taking steps to counter concerns that the number of African Swine Fever cases in the country is being under reported.

The ministry made it illegal to delay or obstruct reports of new ASF outbreaks, to issue false test reports, to distribute falsified health certificates, or to illegally dispose of infected animals. Reuters says Chinese officials are also offering rewards to people who file reports on new cases.

Experts suspect that the 60 outbreaks reported in 18 Chinese provinces may not be an accurate number. China has already imposed transportation limits and other bio-security measures designed to get control of the infectious disease. To date, the infection has caused China to cull hundreds of thousands of pigs from herds across the country.

Officials in Beijing also announced a new case of ASF that killed 55 of 73 pigs on a single farm. China is home to 500 million pigs, more than the combined number of animals found in the rest of the world.

A highly contagious African swine fever virus has been detected in the luggage of a traveler from Shanghai at Tokyo’s Haneda airport, the farm ministry said Friday.

Pork filled dumplings brought by the traveler on Oct. 14 have tested positive for the virus, becoming the second case of the virus being brought to Japan from overseas.

The disease was reported in China in August, while no domestic infections in Japan have been reported so far.

African swine fever is regarded as more lethal than conventional swine fever, also known as hog cholera, and there is no effective vaccine to protect pigs from the deadly disease.

According to the Agriculture, Forestry and Fisheries Ministry, the dumplings were homemade and uncooked. Both African and classical swine fevers pose no direct threat to human health.

In September, hog cholera infection was confirmed among domestic pigs in Japan for the first time in 26 years, in the central Japan city of Gifu.

It is unlikely that food infected with the African swine fever virus will cause an outbreak unless pigs are fed with infected food.

China dropped imports of U.S. soybeans by 80 percent in September and increased Brazilian imports by 28 percent. Reuters reports this is the first time that China has provided data on the country of origin for its commodity imports since the month of March.

China, which typically buys many of its soybeans during the fourth quarter from the U.S., is sourcing soybeans from Brazil as a direct result of the trade war with the United States. Chinese buyers imported 7.59 million metric tons of Brazilian soybeans in September, up from 5.94 million metric tons a year ago.

Soybean imports from the U.S. were 132,200 metric tons, compared with 937,000 in September last year. China implemented a 25 percent tariff on U.S. soybeans in July as part of the tit-for-tat tariffs between the two countries. Corn and sorghum shipments from the U.S. were reported significantly lower, as well.