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(Tampa, Fla.) – Global markets for U.S. grains are interconnected and affected by diverse drivers of demand including relationships with major grain users, ever-changing weather and trade policy.

U.S. Grains Council (USGC) members are meeting in Tampa, Fla., this week at the organization’s 17th International Marketing Conference and 60th Annual Membership Meeting to better understand how the Council’s network of global staff anticipate and respond to these factors in more than 50 countries around the world.

After a grueling year that included an ongoing trade war with China, unprecedented weather challenges and a flurry of trade deals with key customers, more than 350 attendees heard the latest developments and predictions from three experts on those topics to anticipate and plan for this year’s season: Ambassador Craig Allen, president of the U.S.-China Business Council; Eric Snodgrass, principal atmospheric scientist at Nutrien Ag Solutions; and Ken Levinson, executive director of the Washington International Trade Association.

“We want stable, long-term buyers in China,” said Ambassador Allen in his opening remarks about the ongoing and developing relationship with one of the United States’ biggest trading partners. “Nothing else is acceptable and we will work to that end.”

Snodgrass spoke to the power of Mother Nature’s long-term weather and climate issues, saying the Corn Belt is getting consistently wetter and farmers will need better tools to manage increased precipitation.

Levinson spoke to the dynamics driving agreements with major partners – China, Mexico, Canada and Japan – and the potential for new measures to gain new market access.

The morning culminated with selected USGC staff members from overseas offices reacting to how these drivers are interconnected and have impacts on trade in the markets in which they work.

Ryan LeGrand, USGC president and CEO, moderated the session of international directors including Alejandra Danielson-Castillo, director in South Asia; Tommy Hamamoto, director in Japan; Marri Tejada, director for the Western Hemisphere; and Manuel Sanchez, director for Southeast Asia.

From a tariff rate quota in Brazil to a new free trade agreement partner – Japan – and potential free trade agreement partner, Vietnam, each director spoke about positive developments in their own countries and regions in addition to how China, weather in the U.S. and trade agreement movements are impacting how they develop markets for U.S. grains, enable trade and improve lives in these places.

“Our expert country and regional directors and their staff members around the world tackle these very challenges every day to expand markets for U.S. grains,” said LeGrand. “They allow us to be successful for the corn, sorghum and barley sector producers who make up our membership.”

“It’s important for our members to hear from these experts as they will move into their Advisory Team meetings to formulate recommendations for moving trade forward in 2020,” said USGC Chairman Darren Armstrong, a farmer from North Carolina. “We appreciate the feedback and input, as well as the strategies provided by our directors scattered around the world working in our markets every day. They send back critical information to us on specific developments so the Council may remain nimble in addressing them.”

Loaded with information from both the morning’s expert speakers and the knowledge provided by the Council’s overseas directors, attendees headed into the first of three in-depth Advisory Team (A-Team) meetings, during which Council members help identify opportunities, set priorities and chart the course for the organization in the coming year.

 

In the next few days, attendees will continue A-Team meetings reviewing the Council’s Unified Export Strategy (UES) and will recognize members and USGC staff for their years of service before ending the week with a Board of Delegates meeting.

The breadth and depth of the Southeast Asian market for U.S. corn and co-products are hard to imagine, but the incredible innovation and regional demand potential is plain to see once on the ground – as the leaders of the U.S. Grains Council (USGC) and National Corn Growers Association (NCGA) learned firsthand last week during a joint officers mission to Vietnam and Myanmar.

 

“Southeast Asia is a dynamic, growing region for U.S. coarse grains and co-products,” said Darren Armstrong, USGC chairman and farmer from North Carolina. “Witnessing the technological advancements of the Vietnamese industry and the growth expectancy of feed demand in Myanmar allowed these industry leaders to gain the perspective of our customers and end-users on the ground in Southeast Asia.”

 

The Council delegation included Armstrong; Jim Raben, USGC vice chairman and farmer from Illinois; Chad Willis, USGC Secretary/Treasurer and farmer from Minnesota; Jim Stitzlein, USGC past chairman; and Ryan LeGrand, USGC president and chief executive officer. The leaders were joined in-country by Manuel Sanchez, USGC regional director for Southeast Asia, and Caleb Wurth, USGC assistant regional director for Southeast Asia.

 

NCGA representatives included Kevin Ross, NCGA president and farmer from Iowa; Lynn Chrisp, NCGA chairman and farmer from Nebraska; John Linder, NCGA first vice president and farmer from Ohio; Jon Doggett, NCGA chief executive officer; and Brooke Appleton, NCGA vice president of public policy.

 

“This joint mission was a welcome opportunity to join fellow NCGA and USGC officers to learn more about this important market and continue our efforts to build on our existing trading relationship,” Ross said.

 

During the mission, the group met with key current and future customers in the region, including fuel retailers, feed millers, commercial livestock operations, grain traders and other key agribusiness representatives. The U.S. leaders also met with local government representatives as well as the officials from the U.S. Department of Agriculture’s Foreign Agricultural Service (USDA’s FAS) working in each country.

 

“FAS posts all around the region serve as partners and collaborators in all of the in-country programs we conduct,” Armstrong said. “The Council’s outstanding relationship with USDA officials allows us to be successful in our overall mission.”

 

Vietnam – A Long-Time Market with Continued Growth Potential

Vietnam is one of the fastest-growing feed markets in the world – thanks to population and economic growth – and a major buyer of corn and dried distiller’s grains with solubles (DDGS). Vietnam has also jumped from the 16th largest importer in the world to the third largest – in less than a decade. Ranking as the second-largest buyer of U.S. DDGS, Vietnam set a new record for DDGS imports in 2018/2019, increasing purchases by 24 percent year-over-year to nearly 1.3 million metric tons, valued at $278 million.

 

The Council has actively worked with the Vietnamese grain trade and feed industry for more than two decades. The Council’s technical programs in Vietnam have focused on helping livestock producers and feed millers effectively use U.S. coarse grains and manage their operations efficiently. Trade servicing has also helped these customers gain familiarity with the U.S. grain marketing system, quality and price.

 

“It has only been 25 years since the United States normalized relations with Vietnam,” LeGrand said. “The Council has been there since the beginning with an in-country representative.”

 

In Vietnam, the joint officers’ mission explored the integrated supply chain of the world’s largest feed manufacturer by volume – touring one of their feed production and meat processing facilities.

 

“These end-users provided valuable insight into what they need to increase demand for coarse grains and co-products like DDGS,” Armstrong said. “This understanding will help shape the Council’s strategy for developing programs in these markets.”

 

Vietnam also shows great promise for ethanol exports. The country currently allows up to an E5 blend and is working toward a goal of adopting an E10 mandate by 2020, but ethanol import duties prevent the United States from capturing additional market share.

 

During meetings with government officials and fuel retailers, the delegation reiterated the need for Vietnam to reduce this import tariff to stimulate demand and improve the affordability of ethanol-blended fuels for Vietnamese customers. These meetings help build on a foundation of public-private interactions on trade policy in a market targeted for future U.S. trade policy engagement.

 

Myanmar – A Priority Emerging Market for Council Programming

Myanmar has become a priority emerging market for the Council’s work in the last five years. Statistically resembling Vietnam in the early 2000s and China in the 1990s, Myanmar is expected to steadily increase feed consumption and production over the next decade. The Council has been conducting country-wide initiatives to accelerate the fully privatized expansion of the Myanmar feed and fishery industries through the use of U.S. coarse grains and co-products.

 

In Myanmar, the delegation met with the second-largest feed miller in the country and toured a newly commissioned aquaculture feed mill and the Asian World Port Terminal, which handles virtually all cargo handling modes, including breakbulk, container, dry and liquid bulk operations.

 

“Paving new pathways in nontraditional markets like Myanmar has demonstrated the potential for these markets to represent significant volumes of U.S. coarse grains and co-products,” Armstrong said. “The information gained during this joint officers’ mission will help lay the framework for future technical programming, trade servicing and trade policy engagement to capture this growing frontier market.”

 

The members of the joint officers’ mission have now returned home and their firsthand experience in Southeast Asia will further future strategy sessions that set the goals of developing markets, enabling trade and improving lives – for U.S. farmers and agribusinesses and current and future customers in Southeast Asia.

 

“Seeing these two countries in various stages of development was key for our leadership to see and understand,” LeGrand said. “This mission was an opportunity for both organizations to take a deep dive into our programs in a region that will become more important for us with each passing year.”

The U.S. Grains Council announced Export Exchange 2020 this week, scheduled for October 7-9. The event, sponsored by the U.S. Grains Council, Growth Energy and the Renewable Fuels Association, uniquely focuses on connecting international grain buyers with U.S. suppliers. Export Exchange 2020 will take place at the Loews Kansas City hotel in Kansas City, Missouri.

More than 200 international purchasers and end-users of U.S. coarse grains and related products are expected to join an estimated 300 U.S. producers, agribusinesses and representatives at the event. In addition to business-to-business meetings and an exhibit hall, the conference will address critical issues facing U.S. exports to build awareness of the benefits of U.S. corn, sorghum, distiller’s dried grains with solubles (DDGS) and other products.

The grain buyers from 35 countries who attended Export Exchange 2018 in Minneapolis reported purchasing approximately 2.1 million metric tons of coarse grains and co-products traded either at the conference or immediately before or after, valued at an estimated $403 million.

The new year is fewer than 10 days old and already promising to hold new twists and turns for trade, particularly as policy debates, presidential politics and geopolitical issues heighten ahead of the November elections.

 

Here’s a quick review of movement that could impact sales of U.S. grains and related products, including distiller’s dried grains with solubles (DDGS) and ethanol, in 2020 and the years to come:

 

The U.S.-Mexico-Canada Agreement (USMCA) continues to move toward ratification in the U.S. Congress, having already been approved by Mexico and with Canada set to consider the agreement later in January. If these timelines hold, USMCA could be in force by spring, restoring certainty to the trade relationships with the closest and largest U.S. grains trading partners. In addition, the agreement will serve as a blueprint for future trade agreement negotiations.

 

A phase one agreement with China is expected to be signed on Jan. 15 and go into effect within 30 days. The agreement reportedly includes a commitment by China to purchase $40 billion to $50 billion in food and agricultural products over the next two years. Though details are yet to emerge, it is anticipated that China will exempt the current retaliatory tariffs and remove other trade-distorting tariffs as part of this package. Equally important, China agreed to provide structural reforms to remove major non-tariff barriers subject to monitoring, review and enforcement mechanisms.

 

On Jan. 1, the phase one trade agreement between the United States and Japan became effective, leveling the playing field for U.S. agricultural products competing there with products from the European Union (EU), Canada, Australia and New Zealand – all of which already enjoy trade preferences with Japan. The agreement will eliminate tariffs, enact meaningful tariff reductions or allow a specific quantity of imports at a lower duty for key U.S. ag products. A broader, phase two negotiation is expected to begin in April.

 

The United Kingdom‘s (UK) expected departure from the EU on Jan. 31 will tee up negotiations for a potential U.S.-UK free trade agreement. A deal with the world’s fifth largest economy would offer opportunities for free and fair trade, strengthen the transatlantic economic and strategic relationship and help promote economic growth in the European region. At the same time, the UK must determine what its future trading relationship with the EU will entail, particularly whether it wants to align itself more closely with EU or U.S. regulatory standards in areas ranging from agriculture to the environment.

 

Since failing to initiate formal trade negotiations over the last 18 months, the United States and EU have become entwined in numerous trade policy disputes, the most prominent involving a long-running World Trade Organization (WTO) fight over EU government support for Airbus and the EU’s counter-complaint against U.S. support for Boeing. Yet another dispute involves potential duties in retaliation for France’s new digital services tax. Whether these disputes – along with existing tariffs on aluminum and steel and threatened tariffs on autos – will move both sides to engage in a full-fledged bilateral free trade agreement remains to be seen. With a newly formed European Commission in place, EU Trade Commissioner Phil Hogan and U.S. Trade Representative Robert Lighthizer are expected to meet in mid-January.

 

The U.S. government continues to engage with the Indian government to revisit a wide range of policy issues, including prospects for DDGS and ethanol. Among the irritants stalling the process has been the cancellation of India’s preferential trade treatment, offered to developing countries on some goods and services, under the U.S. Generalized System of Preferences (GSP) program.

 

Finally, speculation continues about with which other countries the United States could embark on trade negotiations, including Vietnam, the PhilippinesTaiwanBrazil or a model trade agreement in Africa. Pending anti-dumping and countervailing duties allegations against the United States will be adjudicated in South America. And to help farmers and agribusiness stakeholders make sense of it all, the Council, National Corn Growers Association (NCGA) and 10 state corn organizations are hosting trade school workshops across the Midwest this winter.