Bloomberg News reported this week that, “President Donald Trump said he called off last weekend’s trade talks with China, raising questions about the future of a deal that is now the most stable point in an increasingly tense relationship.
‘I canceled talks with China,’ Trump said Tuesday in Yuma, Arizona. ‘I don’t want to talk to China right now.’
“The phase-one trade deal, which came into force in February, had called for discussions on implementation of the agreement every six months. Chinese Vice Premier Liu He was supposed to hold a video conference call with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, but it was postponed indefinitely.”
The Bloomberg article added that, “Addressing whether the U.S. would pull out of the phase-one deal, Trump said: ‘We’ll see what happens.’ Terminating the deal would require a written notification and take effect 60 days later, unless both parties agree on a different date.”
And Reuters writer Andrea Shalal reported this week that, “No new high-level trade talks have been scheduled between the United States and China but the two sides remain in touch about implementing a Phase 1 deal, White House Chief of Staff Mark Meadows told reporters aboard Air Force One on Tuesday.”
Nonetheless, Wall Street Journal writers Bob Davis and Lingling Wei reported on Wednesday that, “U.S. and Chinese trade negotiators plan to confer by video in the coming days over progress in fulfilling terms of the ‘Phase One’ trade deal and U.S. actions against Chinese technology firms, according to officials in both nations.
“The talks, which had been previously reported, were thrown into doubt Tuesday night when President Trump said that he had canceled talks with China because of his anger over the way Beijing handled the coronavirus pandemic. ‘I don’t want to talk to China right now,’ he said.
But afterward, Mr. Trump’s aides clarified that the president wasn’t talking specifically about the Phase One deal, but more generally. President Trump and Chinese President Xi Jinping haven’t spoken by phone since late March.
The Journal writers explained that, “The Chinese side has been preparing for an Aug. 15 talk between U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He on the status of the trade accord signed early this year. The U.S. side figured the conversation would occur a few days after that. The two sides still haven’t picked a specific date for the talks though planning continues, officials said.
“It wasn’t clear why the two sides haven’t settled on a date, though a delay gives Chinese officials more time to buy U.S. goods and show that they are trying to live up to the deal’s ambitious purchase targets.”
Meanwhile, Reuters News reported on Thursday that, “China and the United States have agreed to hold trade talks ‘in the coming days‘ to evaluate the progress of their Phase 1 trade deal six months after it took effect in February, the Chinese commerce ministry said on Thursday.
“Ministry spokesman Gao Feng made the comments at a weekly briefing held online, but did not elaborate.
“They followed Tuesday’s remarks by White House Chief of Staff Mark Meadows that no new high-level trade talks were scheduled, though both sides were in touch about implementing the Phase 1 deal.”
More specifically with respect to agricultural exports, the USDA’s Foreign Agricultural Service (FAS) indicated in its monthly “Grain: World Markets and Trade” report that, “As of the last week in July, combined U.S. old-crop corn and sorghum commitments (accumulated exports plus outstanding sales) to China stand at 5.6 million tons for delivery in 2019/20, the highest level since 2013/14. Much sorghum has already been shipped, while most corn waits for shipment. These late-season sales bode well for China’s commitments to the United States following the Phase One agreement.”
The FAS update added that, “Aside from the Phase One agreement and despite overhanging trade tensions, the pace of new crop sales to China ostensibly reflects China’s pressing needs for competitively priced feedstuffs to help meet growing feed demand and cool down domestic prices. For China’s feed mills, fewer options for corn substitutes are available after anti-dumping and countervailing duties (AD/CVD) have been imposed on Australian barley. Barring action by China, the AD/CVD on U.S. distillers’ dried grains remains in place for another year and a half.”
Reuters News reported this week that, “Chinese buyers struck deals to buy 195,000 tonnes of American corn, the U.S. Department of Agriculture said on Tuesday, as China grapples with spiking domestic prices.
“China’s demand for corn to feed animals has increased as its pig herd has rebounded more quickly than expected from a deadly swine disease first detected in the country two years ago.
“Chicken producers are also pushing ahead with aggressive expansion plans, according to traders in China.”
A separate report this month from FAS (“China: Livestock and Products Annual“) stated that, “Overall swine production and slaughter will hit record lows in 2020 as African Swine Fever continues to impact China’s hog industry. However, the supply decline will bottom out in 2020 and 2021 beginning hog and sow inventories will be up by 9 percent and 15 percent, respectively. Robust slaughter in 2021 will drive pork production up to 41.5 million tons, from the record low level of 38 million tons in 2020.”
Wall Street Journal writer Jacky Wong reported this week that, “The African swine fever situation has improved, but the impact will still be felt for a while: Rabobank expects pork production in China to fall 17% this year. China has imported more pork, and other meat, to fill the supply gap. Total meat imports have almost doubled from a year earlier in the first seven months. As part of the phase one trade deal, exports from the U.S. have jumped: America is now the second-largest pork supplier to China.”
Furthermore, this month’s Livestock, Dairy, and Poultry Outlook report from the USDA’s Economic Research Service stated that, “Shipments to ChinaHong Kong—which were more than triple those of the second quarter of 2019— more than offset year-over-year declines in exports to most other large foreign buyers of U.S. pork. It is notable that ChinaHong Kong’s second-quarter share of U.S. exports (38 percent) was more than double the share of the next-largest U.S. export market, Mexico, at 17 percent.”
And more generally on U.S. soybean export competitiveness, ERS noted in this month’s Oil Crops Outlook report that, “USDA forecasts that 2019/20 soybean exports from Brazil may swell to 93.5 million metric tons. The revised forecast is up 4.5 million tons from last month and from 74.6 million a year earlier.
“Although July 2020 soybean shipments from Brazil dropped 21 percent to 10.4 million tons from June, gains are still accumulating against a year ago (with a 39-percent increase over the July 2019 trade).
Incredibly, over a 3-year span, Brazilian shipments have grown to more than double the volume of 2019/20 U.S. exports (44.9 million).
“In 2020/21, diminished beginning stocks in Brazil and a big U.S. harvest will only narrow the gap somewhat.”
Source: Keith Good, Farm Policy News