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Will Total U.S. AG Exports Rise If China Buys More?

Jan 28, 2020

Chuck Abbott 

Without a doubt, the best outcome from the Phase One agreement with China “is the possibility of U.S. exports to China returning to pretrade war levels,” says economist Dave Widmar. But it’s not clear how larger sales to China would affect overall U.S. ag exports, which are forecast at $139 billion this year and have varied from a low of roughly $130 billion to a record-high $152 billion over the past several years.

“If there is a surge in China’s purchase activities…would that, in turn, move the needle on total U.S. ag exports?” asked Widmar in the Agricultural Economic Insights blog. When China slashed its purchases by nearly $9 billion in fiscal 2019, the U.S. export total fell by roughly $5 billion. “This is to say the global trade economy adjusts.” Alternative markets were found for some of the lost sales to China. Canada, Mexico, the EU, Japan, and South Korea also are major customers for U.S. farm products.

The Phase One agreement calls for China to buy $40 billion a year of U.S. farm exports, depending on market conditions. “If China’s purchases of ag and related products exceeded $35 billion in 2020, how does the $20 billion increase translate into total U.S. ag exports? It is unlikely to have a dollar-for-dollar impact,” wrote Widmar.

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