An agriculture economist is reviewing the Phase One Trade Agreement with China and where things stand so far in 2021.
David Widmar of Agricultural Economic Insights says 2020 was an interesting year when it came to trade between the U.S. and China. Late in 2020, China began purchasing large quantities of American agricultural goods while attempting to meet the obligations of the Phase One Trade Agreement. He says 2021 is picking up where 2020 left off late last year.
“In the data, 2020 looked like it was a pretty strong year, but not as exciting as we would have hoped early in the year with the Phase One Trade Deal,” Widmar said. “It’s a year where we had seven or eight months of lackluster activity and then a flurry of activity in the last few months. Some of that is expected because of the seasonality of China’s purchases of soybeans, especially, but it was really strong late in the year, and we’ve carried that over. And there was a lot of enthusiasm about whether China will purchase a record amount of ag goods in 2020, and we didn’t get there for a host of reasons. Now, it looks like we could be off to the races for a record level of excitement.”
Widmar says it’s been a while since China bought commodities at this level, and questions how long the buying spree will continue.
“One of the things you also have to keep in mind is China’s trend or appetite for ag goods, especially soybeans, has been on the upward trend over the last 20 years,” said Widmar. “So, there’s a lot of reason to believe that China will continue to purchase into the future, and those purchases will be growing over time. Thinking about 2021, it’s where do we play out in 2021 concerning the total market? How much is available in South America, how much does the U.S. have available, and how do we approach that going forward?”
Widmar notes U.S. soybean supplies are as tight as they’ve been in years.