Market predictions, harvest progress, and China-Iowa relations topic of 'Trade Talk' webinar
The “Harvest Marketing Insights & China’s Commodity Appetite” webinar brought Mike Naig, Chad Hart, and Wengdong Zhang together this week. The trio discussed the present and future of Iowa’s harvest, as well as the state’s trade relations and exports with China.
Mike Naig, Iowa Secretary of Agriculture
Takeaway: Naig primarily focused on Iowa’s year of agriculture; how this past growing season went, how Iowans were growing and adapting to change with technology, and how he predicted 2022 would go for Iowa farmers.
“All things considered, given that we had significant levels of drought across the state of Iowa, this year has exceeded all expectations in terms of field and grain quality,” says Naig. “I think that’s a testament to the innovation in agriculture today.”
More than 97% of the soybean harvest and 91% of the corn harvest has been completed in Iowa, according to a USDA report released Monday. Despite the drought conditions this season, yield, as well as the overall soil quality and health, have been at record highs, both of which are goals the USDA has been focused on.
Iowa is the second-largest agricultural producing state, leading the competition in corn, eggs, pork, ethanol and biodiesel, trailing behind only California in agricultural production. According to Secretary Naig, China is one of the most important export markets for Iowa, as it imports eggs, pork, beef, soybeans, and many other commodities from the state.
“Trade matters to Iowa,” says Naig. “We’re going to continue to work hard to ensure that we’re positioned for success, even in some challenging times with disruptions.”
Chad Hart, Professor, Iowa State University
Takeaway: Hart talked about harvest numbers for 2021, compared those numbers with 2019 and 2020 figures, and discussed projections for 2022. Iowa farmers had a year that exceeded expectations on almost all fronts, according to Hart.
Despite the drought, both corn and soybean yields stayed steady or increased across most of the United States in comparison to past years. Hart does expect that corn acreage in 2022 may see a decrease, as dry conditions this year may limit farmers’ capacity to plant. However, farmers’ innovation in creating drought-resistant corn and soybeans may still lead to record yields, Hart says.
“The innovation within ag over the past few decades, especially in terms of working toward drought-tolerant crops, has definitely paid dividends this year,” says Hart.
In terms of exports to China, soybeans saw their record high in 2020, and 2021 is seeing a reduction in exportation as a result of that record high. Corn also saw a record high in 2020, but the 2021 exports records are following a similar number pattern to 2020. Hart says these patterns are not entirely unexpected, as 2019 and 2020 saw the U.S. renegotiating the USMCA agreement, which explains the pullback in international demand in 2019 and early 2020 and the return of demand in later 2020 and 2021.
“While we’ve had these large corn supplies, we’ve also had very good demand,” says Hart. “And especially as we went through this last year to year and a half, it was international trade that was truly the shining star on the usage side.”
Hart also predicted that corn and soybean prices would stay around $5 and $12, respectively, into 2022 and only dipping about 50¢ into 2023. The steadiness, he explained, was due to the world’s interest in biofuels and biodiesel.
“Farmers are experiencing not only high prices today, but they also have the ability to protect high prices deep into the future,” says Hart.
Wengdong Zhang, Associate Professor, Iowa State University
Takeaway: Zhang spoke about the meeting between President Joe Biden and President Xi Jinping Monday and what that meant for Iowa agriculture, as well as the current and future relationship between Iowan exports and Chinese imports. He commented that while no real progress was made on any specific issues at the presidential meeting, it was important for them to meet.
The new administration is conducting a review of the China Phase One Agreement, which — in part — tracks China’s purchasing of U.S. goods on a year-to-year basis to see if they have reached their goal of buying $200 billion more than their 2017 purchasing baseline.
“The ‘phase one’ deal not only has agricultural targets, but also has manufactured goods targets and energy targets,” says Zhang.
Zhang says that as China deals with African swine fever, it is importing more ag products like pork to meet rising protein consumption; 97% of its pork was produced domestically prior to African swine fever.
This webinar, which is part of the “Trade Talk” series, is hosted by Iowa Economic Development. The next webinar, “Keys to Successful Exporting,” will take place on December 15.