Amid Global Trade Uncertainty, US Ag Exporters Benefiting From Chinese Purchases, Japan Deal

Uncertainty over trade policy and African swine fever continue to overtake agricultural markets, causing “volatility across the industry,” CoBank said in its quarterly U.S. rural economic review, released this month. But there were two bright spots for U.S. exporters, CoBank said: the renewed Chinese purchases of U.S. agricultural products and the initial trade agreement between the U.S. and Japan, which will allow the U.S. ag industry to regain competitiveness in a “key export destination.”

Although the Chinese purchases (see 1909120046) were welcome news for U.S. exporters and “raised questions as to whether a smaller scale deal [with China] is possible in the near-term,” President Donald Trump “appears to remain committed to a comprehensive deal or nothing,” the report said. The deal with Japan, however, will set many U.S. agricultural exports on equal footing with parties in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. While some agricultural sectors will not benefit -- such as certain dairy and rice products -- most will, CoBank said. In particular, eliminated tariffs on sorghum and other “specialty crops” such as almonds, walnuts and blueberries will aid U.S. exporters, as will reduced tariffs on beef, pork, ethanol, wine, cheese and whey.

CoBank also said U.S. exporters may benefit from the outbreak of African swine fever in Asia and Europe, which has caused pork prices to rise, specifically in China. But as the U.S. and China continue trade negotiations, “market participants are struggling to forecast how or when the U.S. will benefit from increased pork shipments to China long term,” the report said.