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After record corn sale to China, Perdue expects ‘a big shipping season this fall’
China is far short of meeting its “phase one” commitment to buy huge amounts of U.S. food and ag exports, but Agriculture Secretary Sonny Perdue said, “We expect a big shipping season this fall” — China’s preferred shopping period for American grain. On Thursday, Chinese companies made one of the largest corn purchases in half a century of USDA records.
Grain sales to China have picked up in recent weeks, providing moments of continuity amid rising tensions between the world’s two largest economic powers. Secretary of State Mike Pompeo described the Chinese Communist Party as “the central threat of our times” during a Senate hearing on Thursday. The nations recently ordered each other to close a consulate, and although the “phase one” agreement de-escalated the dispute, the Sino-U.S. trade war remains unresolved.
Exporters reported the sale of 1.937 million tonnes of U.S. corn for delivery to China during the marketing year that opens on Sept. 1. It was the third-largest corn sale to any country and the largest ever to China. The sale came two weeks after Chinese firms bought 1.762 million tonnes of U.S. corn, a deal that ranked No. 5 on the USDA’s list of largest corn sales ever.
“Lots of potential to grow our ag sales to China — we expect a big shipping season this fall,” said Perdue on social media.
“China has a long way to go,” said Seth Meyer, associate director of the FAPRI think tank at the University of Missouri.
“Phase one” calls for China to import $36.6 billion worth of U.S. food, agricultural, and seafood products this year. “Through June 2020, China’s imports of covered agricultural products were $8.7 billion,” said the Peterson Institute for International Economics. That would require imports of nearly $28 billion in the final six months of the year to meet the goal.
“The product has to make it there in the calendar year,” said Meyer. “While these are good-size corn purchases by the Chinese, we don’t know when they will go (or) if this is a political move to get phase one products ‘on the books’ even if not shipped.”
China was the largest customer for U.S. farm exports before the trade war began in mid-2018, disrupting and reducing exports overall. In late May, the USDA estimated that ag sales to China would total $13 billion in the fiscal year ending Sept. 30. Trump administration officials, including U.S. trade representative Robert Lighthizer, say a wave of purchases in the fall will lift China to meeting its “phase one” pledge.
Meanwhile, Kevin Ross, president of the National Corn Growers Association, said the farm group will seek “aggressive expansion” in exports. “We’re thankful to have USMCA in force and phase one deals with Japan and China. But we have lost ground to our competitors,” he said. “NCGA will continue to push for trade agreements in Southeast Asia and other regions with strong demand potential.”